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What changed in Chipotle Mexican Grill's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Chipotle Mexican Grill's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+276 added−289 removedSource: 10-K (2025-02-05) vs 10-K (2024-02-08)

Top changes in Chipotle Mexican Grill's 2024 10-K

276 paragraphs added · 289 removed · 143 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeTotal Rewards The financial, physical, and mental wellness of our employees remains our top priority and we believe we have compelling compensation packages and incentive programs, and a robust suite of benefit offerings that enable us to engage current team members and attract new team members: We have made substantial investments in our compensation packages, including competitive wages and industry leading incentive programs, such as our annual and quarterly bonus programs, which allow us to attract and retain the top talent in the industry. We offer a Debt-Free Degree program that provides Chipotle employees access to nearly 100 degrees at 10 universities, completely tuition debt free. We support Career Certificates, which further enhances our Tuition Assistance benefits by providing on-demand certificate programs to help Chipotle team members advance their careers in as little as eight weeks. In 2023, we launched a program that provides our medically enrolled employees and their families with a Health Pro who can help them navigate the complex healthcare environment, helping them understand how their health benefits cover their care, how to save money, as well as get expert, high-quality medical care. In 2023, we also offered personalized mental health assistance to all Chipotle employees and their family members with support available 24/7 via in-person, phone, or virtual visits with a licensed counselor. Starting in 2024, we are partnering with SoFi to offer student loan payment matching programs via our 401(k)-retirement program.
Biggest changeOther areas of Total Rewards that help support our employees include: • We have made substantial investments in our compensation packages, including competitive wages and industry leading incentive programs, such as our annual and quarterly bonus programs. • We offer a Debt-Free Degree program that provides Chipotle employees' access to nearly 100 degrees at 10 universities, completely tuition free. • We support Career Certificates, which further enhances our Tuition Assistance benefits by providing on-demand certificate programs to help Chipotle team members advance their careers in as little as eight weeks. • We offer a student loan payment matching programs via our 401(k) retirement program.
We retain an independent third-party compensation consultant each year to conduct a pay equity analysis of our U.S. and Canadian workforce, including factors of pay (e.g., grade level, tenure in role, most recent promotion) and external market conditions (e.g., geographic location), to ensure consistency and equitable treatment among our employees.
We retain an independent third-party compensation consultant each year to conduct a pay equity analysis of our U.S. and Canadian workforce, including factors of pay (e.g., grade level, tenure in role, most recent promotion) and external market conditions (e.g., geographic location), to ensure equitable treatment among our employees.
While costs associated with compliance with laws and regulations have increased as the number and scope of regulation have increased, the total costs incurred have not had, and are not expected to have, a material effect on our capital expenditures, results of operations or competitive position.
While costs associated with compliance with laws and regulations have increased as the number and scope of regulations have increased, the total costs incurred have not had, and are not expected to have, a material effect on our capital expenditures, results of operations or competitive position.
We brand these meats as “Responsibly Raised®.” We also seek to use responsibly grown produce, by which we mean produce grown by suppliers whose practices conform to our Food with Integrity standards and our priorities with respect to environmental considerations and employee welfare.
We brand our meats as “Responsibly Raised®.” We also seek to use responsibly grown produce, by which we mean produce grown by suppliers whose practices conform to our Food with Integrity standards and our priorities with respect to environmental considerations and employee welfare.
Our mission is to win today while we grow our future by focusing on five key fundamental strategies: Sustaining world class people leadership by developing and retaining diverse talent at every level ; Running successful restaurants with a people accountable culture that provides great Food with Integrity while delivering exceptional in-restaurant and digital experiences ; Making the brand visible, relevant, and loved to improve overall guest engagement; Amplifying technology and innovation to drive growth and productivity at our restaurants, support centers and in our supply chain; and Expanding access and convenience by accelerating new restaurant openings in North America and internationally.
Our mission is to win today while we grow our future by focusing on five key fundamental strategies: • Running successful restaurants with a people accountable culture that provides great Food with Integrity while delivering exceptional in-restaurant and digital experiences; • Amplifying technology and innovation to drive growth and productivity at our restaurants, support centers and in our supply chain; • Making the brand visible, relevant, and loved to acquire new guests and improve overall guest engagement; • Sustaining world class people leadership by developing and retaining top talent at every level; and • Expanding access and convenience by accelerating new restaurant openings in North America and internationally.
In 2023, our review included 99% of our U.S. and Canadian employee population, excluding only approximately 50 of our most senior management employees. The analysis identified small, isolated pay gaps for certain segments of the population, and we subsequently made pay adjustments to close those gaps.
In 2024, our review included 99% of our U.S. and Canadian employee population, excluding only approximately 50 of our most senior management employees. The analysis identified small, isolated pay gaps for certain segments of the population, and we subsequently made pay adjustments to close those gaps.
Our 26 independently owned and operated regional distribution centers purchase from various suppliers we carefully select based on quality, price, availability, and the suppliers’ understanding of and adherence to our mission and Food with Integrity standards.
We work with 26 independently owned and operated regional distribution centers that purchase from various suppliers we carefully select based on the suppliers' understanding of and adherence to our mission and Food with Integrity standards, quality and price availability.
We have also sought to increase, where practical, the number of suppliers for our ingredients to help mitigate pricing volatility and reduce our reliance on one or several suppliers, which could create supply shortages.
We have also sought to increase the number of suppliers for our ingredients to help mitigate pricing volatility and reduce our reliance on one or several suppliers, which could create supply shortages.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Competition The fast-casual, quick-service, and casual dining segments of the restaurant industry are highly competitive with respect to, among other things, taste , price, food quality and presentation, service, location, convenience, brand reputation, cleanliness, and ambience of each restaurant.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 8 Table of Contents Competition The fast-casual, quick-service, and casual dining segments of the restaurant industry are highly competitive with respect to, among other things, taste, price, food quality and presentation, service, location, convenience, brand reputation, and cleanliness and ambience of each restaurant.
In addition, we closely monitor industry news, trade tariffs, weather, exchange rates, foreign demand, crises and other world events that may affect our ingredient prices or available supply. Certain key ingredients ( beef, tomatoes, tortillas and adobo ) are purchased from a small number of suppliers. Quality Assurance and Food Safety We are committed to serving only safe, high-quality food.
In addition, we closely monitor industry news, trade tariffs, weather, exchange rates, foreign demand, geopolitical crises and other world events that may affect our ingredient prices or available supply. Certain key ingredients are purchased from a small number of suppliers. Quality Assurance and Food Safety We are committed to serving only safe, high-quality food.
The references to the URLs for these websites are intended to be inactive textual references only. ‎ 8 Table of Contents
The references to the URLs for these websites are intended to be inactive textual references only. 9 Table of Contents
This gives us the opportunity to learn and share our knowledge and expertise with other food safety professionals and regulatory agencies. 4 Table of Contents Digital Business Our digital platform continues to be a strategic driver of our growth.
This gives us the opportunity to learn and share our knowledge and expertise with other food safety professionals and regulatory agencies. Digital Business and Innovation Our digital platform continues to be a strategic driver of our growth.
In our Chipotle restaurants, we strive to serve only meats that are raised in accordance with criteria we have established in an effort to improve sustainability and promote animal welfare, and without the use of non-therapeutic antibiotics or added growth hormones.
In Chipotle-owned and operated restaurants, we strive to serve only animal products that are raised in accordance with criteria we have established in an effort to improve sustainability and promote animal welfare, and without the use of non-therapeutic antibiotics or added growth hormones.
Our food safety programs are also intended to ensure that we not only continue to comply with applicable national, federal, state and local food safety regulations, but also establish Chipotle as an industry leader in food safety. To help achieve this goal, we have a Food Safety Advisory Council comprised of some of the nation’s foremost food safety authorities.
Our food safety programs are also intended to ensure we not only continue to comply with applicable food safety regulations, but also establish Chipotle as an industry leader in food safety. To help achieve this goal, we have a Food Safety Advisory Council comprised of some of the nation’s foremost food safety authorities.
Food with Integrity Serving high-quality food while still charging reasonable prices is critical to ensuring guests enjoy wholesome food at a great value.
Food with Integrity Serving high-quality food at reasonable prices is critical to ensuring guests enjoy wholesome food at a great value.
The Food Safety Advisory Council is charged with evaluating our programs and advising us on ways to elevate our already high standards for food safety. Our food safety and quality assurance team members hold board seats and participate in technical working groups with several associations.
The Food Safety Advisory Council is charged with evaluating our programs and advising us on ways to maintain and elevate our food safety program. Our food safety and quality assurance team members hold board seats and participate in technical working groups with several associations.
Our food safety and quality assurance teams work to ensure compliance with our food safety programs and practices, components of which include: natural inhibitors (to prevent microbial growth in ingredients); advanced technologies (tools that reduce or eliminate pathogens while maintaining food quality); enhanced restaurant procedures (protocols for handling ingredients and sanitizing surfaces in our restaurants); food safety certifications; internal and third-party restaurant inspections; small grower support during on-site audits; supplier interventions (steps to mitigate food safety risks before ingredients reach Chipotle); and ingredient traceability.
Our food safety and quality assurance teams work to ensure compliance with our food safety programs and practices, components of which include: • naturally derived inhibitors to prevent microbial growth in ingredients; • advanced technologies and tools that reduce or eliminate pathogens while maintaining food quality; • enhanced restaurant procedures and protocols for handling ingredients and sanitizing surfaces in our restaurants; • food safety certifications; • internal and third-party restaurant inspections; • small grower support during on-site audits; • supplier interventions steps to mitigate food safety risks before ingredients reach Chipotle; and • ingredient traceability. 4 Table of Contents These and other food safety practices underscore our commitment to be a leader in food safety while continuing to serve high-quality food that our guests love.
Digital sales represent food and beverage revenue generated through the Chipotle website, Chipotle app or third-party delivery aggregators and include revenue deferrals associated with Chipotle Rewards. Digital sales represented 37.4% of food and beverage revenue in 2023, compared to 39.4% of food and beverage revenue in 2022.
Digital sales represent food and beverage revenue for company-owned restaurants generated through the Chipotle website, Chipotle app or third-party delivery aggregators and include revenue deferrals associated with Chipotle Rewards. Digital sales represented 35.1% of food and beverage revenue in 2024, compared to 37.4% in 2023.
As of December 31, 2023, we owned and operated 3,371 Chipotle restaurants throughout the United States (“U.S.”) and 66 international Chipotle restaurants. We manage our operations based on eight regions and aggregate our operations to one reportable segment.
As of December 31, 2024, we owned and operated 3,644 Chipotle restaurants throughout the United States (“U.S.”) and 82 international Chipotle restaurants. Additionally, we had three international licensed restaurants. We manage our U.S. operations based on ten regions and aggregate our operations to one reportable segment.
Since there are not many common roles among our 50 most senior executives, we consider both internal equity by level as well as individualized market data to help ensure we maintain pay equity among this group. 6 Table of Contents Talent Development We provide high-quality growth and development opportunities to retain top talent and support internal promotions.
Since there are not many common roles among our 50 most senior executives, we consider both internal equity by level, as well as individualized market data, to help ensure we maintain pay equity among this group.
Government Regulation and Environmental Matters We are subject to various federal, state and local laws and regulations that govern aspects of our business operations.
We are eager to improve our employee engagement efforts and build even stronger feedback mechanisms to ensure our employees feel valued, heard and respected. Government Regulation and Environmental Matters We are subject to various federal, state and local laws and regulations that govern aspects of our business operations.
This ensures quality, speed and equitable hiring practices are followed throughout internal and external candidate interviews.
This ensures top candidates are identified through equitable hiring practices in both internal and external candidate interviews.
There were no union petitions or campaigns in 2023. We continue to bargain with the one restaurant that voted in 2022 to form a union, and we believe that our relationship with our employees is good.
There were no union petitions or campaigns in 2024, and we continue to bargain in good faith with the one restaurant that voted in 2022 to form a union. We also continue to focus on building a positive people culture where employees feel supported, heard, and are able to grow with Chipotle.
These and other food safety practices underscore our commitment to be a leader in food safety while continuing to serve high-quality food that our guests love. Our food safety and quality assurance teams establish and monitor our quality and food safety programs and work closely with suppliers to ensure our high standards are met throughout the supply chain.
Our food safety and quality assurance teams establish and monitor our quality and food safety programs and work closely with suppliers to ensure our high standards are met throughout the supply chain. We maintain a limited list of approved suppliers, many of whom are among the top suppliers in the industry.
Human Capital At Chipotle, our vision is to cultivate an environment where our employees can thrive, pursue their passion and become lifelong leaders. We believe in investing and supporting our people because they are our most important asset and give us a competitive advantage in our business.
Human Capital At Chipotle, our vision is to cultivate an environment where our employees can thrive and grow into great leaders. We believe in investing and supporting our people because they are our most important asset. As of December 31, 2024, Chipotle employed 130,504 people worldwide and 1,328 contract workers.
As of December 31, 2023, U.S.-based employee diversity statistics were as follows: 5 Table of Contents Our most recent EEO-1 consolidated report is posted on the Investors page of our website at www.ir.chipotle.com under Corporate Governance – Human Capital Information and additional details about the demographics of our employee population is included in our biennial Sustainability Report and interim Update Report on our website www.chipotle.com/sustainability .
Our most recent Equal Employment Opportunity consolidated report is posted on the Investors page of our website at www.ir.chipotle.com under Corporate Governance – Human Capital Information and additional details about the demographics of our employee population is included in our biennial Sustainability Report and interim Update Report on our website www.chipotle.com/sustainability . 6 Table of Contents We have undertaken a range of activity to promote a culture of inclusion: • We continue to drive a consistent and structured candidate interview process with interview guides.
The ESC is available seven days a week to resolve employee questions about things like restaurant health and safety, compliance, benefits, payroll, etc. We also maintain a confidential Respectful Workplace Hotline that allows employees to anonymously report concerns like sexual harassment, discrimination, and retaliation.
We actively encourage our employees to report any issues or concerns without fear of reprisal, intimidation, or harassment. We also respond to employee issues quickly via our Employee Service Center which is available seven days a week to resolve employee questions about things like restaurant health and safety, compliance, benefits, payroll, etc.
As of December 3 1, 2023, Chipotle employed 116,068 people worldwide and 1,088 contract workers. Of our employees, 114,042 worked in the United States , and 2,026 worked internationally across Canada, France, Germany, and the United Kingdom. Within the U.S., 112,572 employees worked in our restaurants, and 1,470 in our Restaurant Support Centers.
Of our employees, 127,820 worked in the United States, and 2,684 worked internationally across Canada, France, Germany, and the United Kingdom. Within the U.S., 126,233 employees worked in our restaurants, and 1,587 in our Restaurant Support Centers and Field Leadership.
During the 9-month program, participants learn the critical capabilities of leading oneself, leading others, and leading the business with topics designed to stretch capabilities and improve decision-making skills. Cultivate University: A four-day immersive leadership experience designed to upskill our new multi-unit restaurant leaders to excel in their role and execute on their Top 5 KPIs.
During the 6-month program, participants focus on the capabilities of leading oneself, others, and the business with topics designed to stretch capabilities and improve decision-making skills. In addition, to ensure leadership continuity, we maintain a robust succession planning process, focusing on critical roles across the company.
In recent years, we have significantly upgraded our capabilities by digitizing our restaurant kitchens, expanding our partnerships with third-party delivery services and building more Chipotlanes, which is our drive through format for customer pick-up of digital orders.
We have made digital ordering convenient with continued enhancements to our app and by building more Chipotlanes, which is our drive through format for guest pick-up of digital orders. We are also investing in technology and tools to modernize the back of house of our restaurants and to improve the team member experience.
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We maintain a limited list of approved suppliers , many of whom are among the top suppliers in the industry.
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Talent Acquisition We remain committed to the growth, development, and advancement of our people. In 2024, over 85% of our in-restaurant leadership roles were filled through internal promotions, which remains a critical component to our staffing strategy.
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We have made digital ordering convenient with enhancements to the Chipotle app and website, such as customization, contactless delivery, and group ordering and we have improved the overall guest experience within the app with the inclusion of order readiness messaging, wrong location detection and reminders to scan for points.
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To continually attract and hire external talent, we remain focused on creating a best-in-class job seeker and General Manager hiring experience that prioritizes speed, but that also aims to create a transparent process; an experience that identifies shift-specific needs and elevates our talent bar for quality-of-hire.
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We also believe our efforts to manage our workforce have been effective, as evidenced by a strong culture and our employees’ demonstrated commitment to living our purpose and values. Talent Acquisition We continue to invest heavily in recruiting top talent and ensuring appropriate staffing levels are maintained, especially during our two peak hiring seasons (spring and fall).
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We have seen early success with our new virtual hiring assistant "Ava Cado", almost doubling our application flow. With Ava Cado, approximately 90% of applications are completed, and restaurants are leveraging automated interview rescheduling, freeing up managers to run great restaurants and serve our guests.
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We focus on new and innovative ways to attract and engage talent for our restaurants, which includes marketing campaigns that build on our documentary-style television spots, featuring unscripted testimonials from team members about the impact Chipotle has had on their lives.
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To expand our recruitment marketing efforts we continue developing both new and existing partnerships, such as Transition Overwatch and Recruit Military, which assist transitioning Veterans and their spouses.
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We invest in advertising on social media and highlight growth opportunities and the possible trajectory of achieving six-figure total compensation in approximately three years. Additionally, we now offer a formal Summer Internship Program to invest in students while creating opportunities for our restaurant employees to further gain exposure to our Restaurant Support Centers.
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We also prioritize understanding the hiring needs of our international operations in Canada, the United Kingdom, France, and Germany. 5 Table of Contents Culture and Inclusivity ("C&I") Our purpose extends beyond serving nutritious food using real ingredients.
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Diversity, Equity & Inclusion Maintaining a diverse, equitable and inclusive work environment is critical to our success as a business.
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We are on a journey to create a global culture where everyone is welcome and feels a genuine sense of belonging, and we believe this is achieved through our daily interactions and commitment to model inclusive leadership. In 2024, Chipotle continued to invest in employee development and training.
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Notably, our rate of internal promotions for 2023 was similar within our employee populations, with approximately 50% of promoted employees identifying as female and 39% of promoted employees identifying as Hispanic or Latino. We have undertaken several actions to promote diverse, equitable and inclusive work environments.  We created a consistent and structured candidate interview process with new interview guides.
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Our learning programs include inclusive topics and skill-building to provide our leaders with the resources they need to succeed in their current roles and prepare for the future. Our training programs will continue to evolve to respond to a constantly changing world.
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We also launched an internal job board across multiple communication channels to our employees to provide increased visibility and access to internal opportunities.  Since December 2021, we have participated in Management Leadership for Tomorrow’s Black Equity at Work Certification Program, which establishes a comprehensive aggregate measurement system and provides a rigorous, results-oriented approach that accelerates progress toward Black equity internally, amongst our employees, and externally by supporting Black equity within our business partners and in the communities where we operate.  In early 2023, we engaged an independent third-party consultant to conduct a Talent Management Equity Audit to identify places in our talent management cycle where we may need to eliminate bias and/or create more equitable policies, practices, and procedures; identify potential blockers and new opportunities to create and sustain equity in talent management; and identify key strengths and pockets of risk.
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Devotion to our culture of inclusivity emanates from our values and the belief that our people make us what we are. We do not see inclusion as a moment, but a movement towards a future where all people can experience success as their best authentic selves.
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The consultant concluded that Chipotle has a robust set of processes, practices and policies to enable equitable talent recruiting, development and retention throughout the company and identified opportunities to strengthen Chipotle’s existing practices.
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That is why our efforts are not confined to certain roles, departments, identities, or geographies. Driven by a strategy spanning across culture, community, candidate, career, and commerce, we are making meaningful strides towards a future where diversity is understood, embraced, and is a source of our strength.
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See the Investors page of our website at www.ir.chipotle.com under Corporate Governance – Human Capital Information for additional details.  We have a holistic approach to pay equity to ensure consistent and equitable treatment among our employees.
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Maintaining a work environment where all people can succeed as their full authentic self is critical to our success as a business. To deliver meaningful programs that meet the needs of our employees, it is important we understand the dynamic composition of our workforce.
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In 2023, we had more than 24,000 internal promotions, including 100% of U.S. based Regional Vice Presidents, 87% of Team Directors, and 87% of Field Leaders. To develop our employees, we provide the following programs:  Leadership Evolution and Development: Focuses on preparing a cross-functional cohort of mid-level managers for the future of work and leadership.
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As of December 31, 2024, 48.9% of our workforce was male and 49.8% of our workforce was female.
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Participants are introduced to a variety of leadership models as well as operational tools to support them in leading effective teams and driving results in their restaurants.  General Manager Upskilling: Trains our restaurant leaders in fundamental soft skills to help bolster their leadership acumen so that they can better lead their teams and create an exceptional guest experience.  Executive Development: Focuses on developing high potential Team Directors in areas such as leadership, marketing, business and finance, data and analytics, ESG and hospitality, so they gain an in-depth understanding of various functions within the company.  Teach & Taste Live seminars: Offers lunch and learn sessions on leadership topics such as effective communication, emotional intelligence, and building a culture of accountability to provide on-going professional development for employees at our Restaurant Support Centers.
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We also launched an internal job board across multiple communication channels to provide increased visibility and access to internal opportunities. • In 2024, Chipotle hired a Director of C&I to create and execute a strategy for inclusion, advise across Centers of Excellence, and enhance existing programs with C&I training.
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Each course introduces a new leadership skill and offers best practices and actionable tools to continue developing the top talent that supports our field operations.  Development courses and online programs that focus on creating a culture of belonging.  Online executive coaching for mid- and senior-level leaders throughout the organization.  Succession Planning: We utilize talent calibrations to identify a diverse pipeline of emerging leaders and define appropriate development programs.
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This specialized role is also responsible for the continued maturation of our Employee Resource Groups through a new strategy that improves the leader and member experience. • We have a holistic approach to pay equity to ensure consistent and equitable compensation among our employees.
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This, in addition to a credit optimization service, will help bolster our employees’ financial well-being. Culture and Engagement Giving employees the opportunity to provide anonymous feedback is a key part of our employee engagement strategy, which positively contributes to our culture. This begins with soliciting feedback regarding onboarding.
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Talent Management We are committed to cultivating a high-performing workforce through a talent development strategy that prioritizes attracting, developing, and retaining exceptional talent at every level of the organization. In 2024, we promoted over 23,000 employees.
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As of December 31, 2023, 9 in 10 respondents in our restaurants reported a favorable onboarding experience. For our employees in field support organizations and Restaurant Support Centers, nearly 95% of respondents had a favorable view of their onboarding.
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Importantly, amongst our Field Leadership roles (Field Leaders, Team Directors, Regional Directors of Operations, and Regional Vice Presidents), the internal promotion rate was above 80%. Our robust hiring, onboarding, and training programs ensure our newly hired and recently promoted employees are set up for success and are aligned with Chipotle's values and goals.
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Results of our surveys are shared with business partners and senior leaders, who continuously work to improve the experience for all employees.
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We deployed a variety of critical programming ensuring leadership development where most needed. Some notable highlights include: • Cultivate University is our leadership training program for new Field Leaders and Team Directors navigating multi-unit management for the first time.
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To encourage a collaborative working culture between our Restaurant Support Centers and restaurant operations, we created an Operations Council comprised of employees from restaurant and field leadership, operations, and our business partners, who work together to share feedback and implement new projects collaboratively. 7 Table of Contents Additionally, to promote an engaged culture, we respond to employees quickly via our Employee Service Center (“ESC”).
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Leaders are brought together for a four-day immersive leadership experience designed to bolster leadership skills, while validating and grounding attendees in the operational skills necessary to succeed. In 2024, we had 129 leaders complete the program. • We introduced additional required restaurant leader training at all levels in 2024, building skills around accountability, coaching, feedback, delegation, and resolving conflict.
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The courses are designed to align with the leadership skills necessary to excel at each level of restaurant management. • We formalized our Field Leader in Training materials and have seen cohorts launch throughout the business, ensuring that Managers interested in promotion are getting the development they need to take on the next role. • Leadership Evolution and Development, our leadership development program, is designed to prepare a cross-functional cohort of mid-level managers for the future of work and leadership.
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In 2024, we identified successors for 72% of key positions and continued to develop individualized development plans tailored to prepare successors for readiness.
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Due to Chipotle's growth, we are excited about two newly created regions and three promotions into Regional Director of Operations and Regional Vice President roles, highlighting additional growth and development for our field teams. 7 Table of Contents Total Rewards The financial, physical, and mental well being of our employees remains our top priority.
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We believe we have compelling compensation packages and incentive programs, and a robust suite of benefit offerings that enable us to engage current team members and attract new team members.
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In 2024, we conducted an Employee Value Proposition survey which was intended to help us understand what employees appreciate in Chipotle as an employer, what needs improvement and what drives value for our employees. We have gathered valuable insights that will help us continue to improve the employee experience and attract and retain the best talent in the industry.
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This, in addition to a credit optimization service, has helped to bolster our employees' financial well-being. • We also offer personalized mental health assistance to all Chipotle employees and their family members with support available 24/7 via in-person, phone, or virtual visits with a licensed counselor. • Starting in 2025, we are expanding our mental health benefits by offering free access to a mental health app to all U.S. employees.
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Employee Listening We value feedback; both positive sentiments and constructive comments help us improve our organization and culture. Many of our best ideas come from Chipotle employees and we use various communication channels to maintain awareness and responsiveness to questions, concerns, and ideas across our workforce.
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This includes direct daily engagement through meetings with General Managers, lunch and learns, and other one-on-one interactions. Employees are encouraged to ask questions, voice concerns directly or anonymously report potential violations of Chipotle's Code of Ethics through our Respectful Workplace hotline. Employees also can raise concerns using other mechanisms, including communication with their managers or human resources business partners.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur efforts to mitigate future price risk through forward contracts, strong partnerships with key suppliers, directly managing key raw material procurement, diversifying our supply base and other activities may not fully insulate us from increases in commodity costs, which could have an adverse impact on our profitability.
Biggest changeWe try to mitigate future price risk through forward contracts, strong partnerships with key suppliers, directly managing key raw material procurement and diversifying our supply base and countries of origin; however, these activities may not fully insulate us from increases in costs, which could have an adverse impact on our profitability. 15 Table of Contents We also could be adversely impacted by price increases specific to meats raised in accordance with our Responsibly Raised animal welfare criteria, and ingredients grown in accordance with our Food with Integrity specifications, the markets for which are generally smaller and more concentrated than the markets for conventionally raised or grown ingredients.
Our profitability has been and could continue to be adversely impacted by increases in labor costs, including wages and benefits, which are some of our most significant costs, including increases triggered by federal, state and local laws governing matters such as minimum wages, meal and rest breaks and changes to eligibility for overtime pay; regulations regarding scheduling and benefits; increased health care and workers’ compensation insurance costs; and higher wages and benefit costs necessary to attract, hire and retain high-quality employees with the right skill sets in a highly competitive job market.
Our profitability has been and could continue to be adversely impacted by increases in labor costs, including wages and health benefits, which are some of our most significant costs, including increases triggered by federal, state and local laws governing matters such as minimum wages, meal and rest breaks and changes to eligibility for overtime pay; regulations regarding scheduling and benefits; increased health care and workers’ compensation insurance costs; and higher wages and benefit costs necessary to attract, hire and retain high-quality employees with the right skill sets in a highly competitive job market.
The ongoing and long-term costs of these impacts related to climate change and other sustainability-related issues could have a material adverse effect on our business and financial condition if we are not able to mitigate them. General Risk Factors Economic and business factors that are largely beyond our control may adversely affect consumer behavior and the results of our operations.
The ongoing and long-term costs of these impacts related to climate change and other sustainability-related issues could have a material adverse effect on our business and financial condition if we are not able to mitigate them. General Risk Factors Economic and business factors that are largely beyond our control may adversely affect consumer behavior and our financial results.
Increased competition could have an adverse effect on our sales, profitability and development plans. If guest or dietary preferences change, if our marketing efforts are unsuccessful, or if our restaurants are unable to compete successfully with other restaurant outlets, our business could be adversely affected.
Increased competition could have an adverse effect on our sales, profitability and development plans. If guest tastes or dietary preferences change, if our marketing efforts are unsuccessful, or if our restaurants are unable to compete successfully with other restaurant outlets, our business could be adversely affected.
We continue to believe that our commitment to higher-quality and responsibly sourced ingredients resonates with guests and gives us a competitive advantage; however, many of our competitors also make claims related to the quality of their ingredients and lack of artificial flavors, colors and preservatives.
We continue to believe our commitment to higher-quality and responsibly sourced ingredients resonates with guests and gives us a competitive advantage; however, many of our competitors also make claims related to the quality of their ingredients and lack of artificial flavors, colors and preservatives.
A failure to recruit, develop and retain effective leaders or the loss or shortage of personnel with key capacities and skills could impact our strategic growth plans and jeopardize our ability to meet our business performance expectations and growth targets.
A failure to recruit, develop and retain effective leaders or the loss or shortage of management personnel with key capacities and skills could impact our strategic growth plans and jeopardize our ability to meet our business performance expectations and growth targets.
Although we monitor and audit compliance with our program, we cannot guarantee that each and every food item is safely and properly maintained from the start of the supply chain through guest consumption.
Although we monitor and audit compliance with our program, we cannot guarantee that every food item is safely and properly maintained from the start of the supply chain through guest consumption.
Our ability to effectively manage our business and coordinate the procurement, production, distribution, safety and sale of our products depends significantly on the availability, reliability and security of these systems.
Our ability to effectively manage our business and coordinate the procurement, production, distribution, safety and sale of our products depends significantly on the consistent availability, reliability and security of these systems.
Climate change and government regulation relating to climate change also could result in construction delays for new restaurants and interruptions to the availability or increases in the cost of utilities.
Climate change and government regulation relating to climate change mitigation also could result in construction delays for new restaurants and interruptions to the availability or increases in the cost of utilities.
If we are unable to meet our sustainability-related goals or evolving stakeholder or industry expectations and standards, or if we are perceived to have not responded appropriately to the growing concern for sustainability issues, investors, guest and other stakeholders may choose to patronize a competitor that they perceive to be more responsive, and our reputation, business or financial condition may be adversely affected.
If we are unable to meet our sustainability-related goals or evolving stakeholder or industry expectations and standards, or if we are perceived to have not responded appropriately to the growing concern for sustainability issues, investors, guests and other stakeholders may choose to patronize a competitor that they perceive to be more responsive, and our reputation, business or financial condition may be adversely affected.
We may be at a higher risk for food safety incidents than some competitors due to our greater use of fresh, unprocessed produce, handling of raw chicken in our restaurants, our reliance on employees cooking with traditional methods and the lack of added preservatives and frozen ingredients in our menu items.
We may be at a higher risk for food safety incidents than some competitors due to our greater use of fresh, unprocessed produce, handling of raw chicken in our restaurants, our reliance on employees cooking with traditional methods and the lack of artificial preservatives and frozen ingredients in our menu items.
We continue to make significant investments in technology, third-party services and personnel to develop and implement systems and processes that are designed to anticipate cyber-attacks and to prevent or minimize breaches of our information technology systems or data loss, but these security measures cannot provide assurance that we will be successful in preventing such breaches or data loss.
We continue to make significant investments in technology, third-party services and employees to develop and implement systems and processes that are designed to anticipate cyber-attacks and to prevent or minimize breaches of our information technology systems or data loss, but these security measures cannot provide assurance that we will be successful in preventing such breaches or data loss.
All of these regulations impose additional obligations on us and our failure to comply with any of these regulations could subject us to penalties and other legal liabilities, which could adversely affect our ability to attract and retain employees and our results of operations, and potentially cause us to close or reduce operating hours of some restaurants in these jurisdictions.
All of these regulations impose additional obligations on us, which could increase our operating costs, and our failure to comply with any of these regulations could subject us to penalties and other legal liabilities, which could adversely affect our ability to attract and retain employees and our results of operations, and potentially cause us to close or reduce operating hours of some restaurants in these jurisdictions.
To the extent we, a third party or such an individual were to experience a breach of our or their information technology systems that results in the unauthorized access, theft, use, destruction or other compromises of customers’ or employees’ data or confidential information of Chipotle stored in or transmitted through such systems, including through cyber-attacks or other external or internal methods, it could result in a material loss of revenues from the potential adverse impact to our reputation and brand, a decrease in our ability to retain customers or attract new ones, the imposition of potentially significant costs (including loss of data or payment for recovery of data) and liabilities, loss of business, loss of business partners and licensees and the disruption to our supply chain, business and plans.
To the extent we, a third party or such an individual were to experience a breach of our or their information technology systems that results in the unauthorized access, theft, use, destruction or other compromises of guests’ or employees’ data or confidential information of Chipotle stored in or transmitted through such systems, including through cyber-attacks or other external or internal methods, it could result in a material loss of revenues from the potential adverse impact to our reputation and brand, a decrease in our ability to retain guests or attract new ones, the imposition of potentially significant costs (including loss of data or payment for recovery of data) and liabilities, loss of business, loss of business partners and licensees and the disruption to our supply chain, business and plans.
Our timeline for completing construction also has gotten longer, due to landlord reluctance to commit to building in light of high interest rates, tight money supply and general economic conditions, and due to backlogs and long wait times for us to obtain required permits and utility hookups.
Our timeline for completing construction also has gotten longer, due to landlord reluctance to commit to building in light of fluctuating interest rates, tight money supply and general economic conditions, and due to backlogs and long wait times for us to obtain required permits and utility hookups.
In addition, we incur substantial startup expenses each time we open a new restaurant, and it can take up to 36 months to ramp up the sales and profitability of a new restaurant, during which time costs may be higher as we train new employees and build up a customer base.
In addition, we incur substantial startup expenses each time we open a new restaurant, and it can take up to 36 months to ramp up the sales and profitability of a new restaurant, during which time costs may be higher as we train new employees and build up a guest base.
Our business is subject to extensive federal, state, local and international laws and regulations, including those relating to: preparation, sale and labeling of food, including regulations of the Food and Drug Administration, which oversees the safety of the entire food system, including inspections and mandatory food recalls, menu labeling and nutritional content; employment practices and working conditions, including minimum wage rates, wage and hour practices, meal and rest breaks, fair workweek/secure scheduling and “just cause” legislation, employment of minors, discrimination, harassment, classification of employees, paid and family leave, workplace safety, immigration and overtime among others; privacy and data security (including regulations governing the protection of personal information, advertising and marketing, access by children, biometrics, surveillance, artificial intelligence, health-related information and financial information), such as California Privacy Rights Act and CCPA in California and privacy-related legislation in a growing number of other states, and international laws such as GDPR in the European Union and Personal Information Protection and Electronic Documents Act in Canada; health, sanitation, safety and fire standards and the sale of alcoholic beverages; building and zoning requirements, including state and local licensing and regulation governing the design and operation of facilities and land use; public accommodations and safety conditions, including the Americans with Disabilities Act and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations, online resources and other areas; environmental matters, such as emissions and air quality; water consumption; the discharge, storage, handling, release and disposal of hazardous or toxic substances; local ordinances restricting the types of packaging we can use in our restaurants; and claims we make about our sustainability practices and achievements; and public company compliance, disclosure and governance matters, including accounting and tax regulations, SEC and NYSE disclosure requirements.
Our business is subject to extensive federal, state, local and international laws and regulations, including those relating to: • preparation, sale and labeling of food, including regulations of the Food and Drug Administration, which oversees the safety of the entire food system and covers inspections and mandatory food recalls, menu labeling and nutritional content; • employment practices and working conditions, including minimum wage rates, wage and hour practices, meal and rest breaks, fair workweek/secure scheduling and “just cause” legislation, employment of minors, discrimination, harassment, classification of employees, paid and family leave, workplace safety, immigration and overtime among others; • privacy and data security (including regulations governing the protection of personal information, advertising and marketing, access by children, biometrics, surveillance, artificial intelligence, health-related information and financial information), such as California Privacy Rights Act and CCPA in California and privacy-related legislation in a growing number of other states, and international laws such as GDPR in the European Union and Personal Information Protection and Electronic Documents Act in Canada; • health, sanitation, safety and fire standards and the sale of alcoholic beverages; • building and zoning requirements, including state and local licensing and regulation governing the design and operation of facilities and land use; • claims made in marketing and advertising, including regarding nutritional information and sustainability impacts; • public accommodations and safety conditions, including the Americans with Disabilities Act and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations, online resources and other areas; • environmental matters, such as emissions and air quality; water consumption; the discharge, storage, handling, release and disposal of hazardous or toxic substances; local ordinances restricting the types of packaging we can use in our restaurants; and claims we make about our sustainability practices and achievements; • new or increased tariffs, trade sanctions or taxes; and • public company compliance, disclosure and governance matters, including accounting and tax regulations, SEC and NYSE disclosure requirements.
In addition, our supply chain is subject to increased costs caused by the effects of climate change, diminishing energy and water resources. Increasing weather volatility and changes in global weather patterns can reduce crop size and crop quality, or destroy crops altogether, which could result in decreased availability or higher pricing for our produce and other ingredients.
In addition, our supply chain is subject to increased costs caused by the effects of climate change and diminished energy and water resources. Increasing weather volatility and changes in global weather patterns could reduce crop size and crop quality, or destroy crops altogether, which could result in decreased availability or higher pricing for our produce and other ingredients.
These legal proceedings have involved, and in the future may involve, allegations of illegal, unfair or inconsistent employment practices, including those governing wage and hour, employment of minors, discrimination, harassment, wrongful termination, and vacation and family leave laws; food safety issues including food-borne illness, food contamination and adverse health effects from consumption of our food products; data security or privacy breaches; guest discrimination; personal injury in our restaurants; marketing and advertising claims, including claims that our Food with Integrity or other sustainability claims are misleading or inaccurate; infringement of patent, copyright or other intellectual property rights; violation of the federal securities laws; workers’ compensation; or other concerns.
These legal proceedings have involved, and in the future may involve, allegations of illegal, unfair or inconsistent employment practices, including those governing wage and hour, employment of minors, discrimination, harassment, wrongful termination, and vacation and family leave laws; food safety issues including food-borne illness, food contamination and adverse health effects from consumption of our food products; data security or privacy breaches; discrimination against guests or job applicants; personal injury in our restaurants; marketing and advertising claims, including claims that our Food with Integrity, marketing or sustainability claims are misleading or inaccurate; infringement of patent, copyright or other intellectual property rights; violation of the federal securities laws; workers’ compensation; or other concerns.
We could also be subjected to negative responses by governmental actors (such as anti-ESG legislation or retaliatory legislative treatment) or consumers (such as boycotts or negative publicity campaigns) that could adversely affect our reputation, business, financial performance and growth. Climate change and volatile adverse weather conditions could adversely affect our restaurant sales or results of operations.
We could also be subjected to negative responses by governmental actors (such as anti-ESG legislation or retaliatory legislative treatment) or consumers (such as boycotts or negative publicity campaigns) that could adversely affect our reputation, business, financial performance and growth. 19 Table of Contents Climate change and volatile adverse weather conditions could adversely affect our restaurant sales or results of operations.
Failures may be caused by various factors, including power outages, catastrophic events, physical theft, computer and network failures, inadequate or ineffective redundancy, problems with transitioning to upgraded or replacement systems or platforms, flaws in third-party software or services, errors or improper use by our employees or the third-party service providers.
Failures may be caused by various factors, including power outages, natural disasters and other catastrophic events, physical theft, computer and network failures, inadequate or ineffective redundancy, problems with transitioning to upgraded or replacement systems or platforms, flaws in third-party software or services, errors or improper use by our employees or the third-party service providers.
If we are unable to build the customer base that we expect or fail to overcome the higher startup expenses associated with new restaurants, our new restaurants may not be as profitable as our existing restaurants.
If we are unable to build the guest base that we expect or fail to overcome the higher startup expenses associated with new restaurants, our new restaurants may not be as profitable as our existing restaurants.
Media or other reports of existing or perceived security vulnerabilities in our systems or those of our third-party business partners or service providers can also adversely impact our brand and reputation and materially impact our business.
Media or other reports of existing or perceived security vulnerabilities in our systems or those of our third-party business partners or service providers can also adversely impact our brand and reputation and negatively impact our business.
Our quarterly financial results may fluctuate significantly and could fail to meet investors’ expectations for various reasons, including : neg ative publicity about the safety of our food, employment-related issues, litigation or other issues involving our restaurants; fluctuations in supply costs, particularly for our most significant ingredients, and our inability to offset the higher cost with price increases, without adversely impacting guest traffic; our inability to purchase sufficient quantities of our key ingredients as our restaurant count grows; labor availability and wages of restaurant management and employees; increases in marketing or promotional expenses; the timing of new restaurant openings and related revenues and expenses, and the operating costs at newly opened restaurants; the impact of inclement weather and natural disasters, such as freezes and droughts, which could decrease guest traffic and increase the costs of ingredients; the amount and timing of stock-based compensation; litigation, settlement costs and related legal expenses; tax expenses, asset impairment charges and non-operating costs; and variations in general economic conditions, including the impact of rising inflation and the impact of rising interest rates on consumer demand trends .
Our quarterly financial results may fluctuate significantly and could fail to meet investors’ expectations for various reasons, including: • negative publicity about the safety of our food, employment-related issues, guest safety, litigation or other issues involving our restaurants; • fluctuations in supply costs, particularly for our most significant ingredients, and our inability to offset the higher cost with price increases, without adversely impacting guest traffic; • our inability to purchase sufficient quantities of our key ingredients and equipment as our restaurant count grows; • labor availability and wages of restaurant management and employees; • increases in marketing or promotional expenses; • the timing of new restaurant openings and related revenues and expenses, and the operating costs at newly opened restaurants; • the impact of inclement weather and natural disasters, such as freezes and droughts, which could decrease guest traffic and increase the costs of ingredients; • the amount and timing of stock-based compensation; • litigation, settlement costs and related legal expenses; • taxes, new or increased tariffs or trade sanctions, asset impairment charges and non-operating costs; and • variations in general economic conditions, including the impact of rising inflation and the impact of rising interest rates on consumer demand trends.
For example, measuring Scope 1, 2 and 3 greenhouse gas emissions relating to our business, developing reduction plans and initiatives, and creating and disclosing achievable reduction goals can be costly, difficult and time consuming and is subject to evolving reporting standards, including California’s Climate Corporate Data Accountability Act, California’s Greenhouse Gases: Climate-Related Financial Risk Bill, the SEC’s proposed climate-related reporting requirements, and similar proposals by other local and international regulatory agencies.
For example, measuring Scope 1, 2 and 3 greenhouse gas emissions relating to our business, developing reduction plans and initiatives, and creating and disclosing achievable reduction goals can be costly, difficult and time consuming and is subject to evolving reporting standards, including California’s Climate Corporate Data Accountability Act, California’s Greenhouse Gases: Climate-Related Financial Risk Bill and similar proposals by other national, local and international regulatory agencies.
Our ability to continue to grow our business depends substantially on the contributions and abilities of our executive leadership team and other key management personnel. Changes in senior management could expose us to significant changes in strategic direction and initiatives.
Our ability to continue to grow our business depends substantially on the contributions and abilities of our executive leadership team and other key management personnel. Changes in senior management could result in significant changes in strategic direction and initiatives.
If we partner with or acquire new businesses and third-party providers that do not align with our core values or that do not fulfill their contractual responsibilities and commitments, our brand reputation and international growth plans could suffer.
If we partner with third parties or acquire new businesses that do not align with our core values or that do not fulfill their contractual responsibilities and commitments, our brand reputation and international growth plans could suffer.
Persistent inflation and concern about a prolonged economic downturn may lead consumers to decrease their discretionary spending. A significant decrease in our guest traffic or average transactions would negatively impact our financial performance.
Persistent inflation and concern about a prolonged economic downturn may lead consumers to decrease their discretionary spending. A significant decrease in guest traffic or average transaction size would negatively impact our financial performance.
These include costs associated with notifying affected individuals and other agencies, additional security technologies, training and personnel, retention of experts and providing credit monitoring services for individuals whose data has been breached.
These include costs associated with notifying affected individuals and other agencies, additional security technologies and training, hiring additional employees, retention of experts and providing credit monitoring services for individuals whose data has been breached.
We may be forced to source ingredients from new geographic regions, which could impact quality and taste, and increase our costs. These factors are beyond our control and, in many instances, unpredictable.
We may be forced to source ingredients from new geographic regions, which could impact quality and taste, and increase our costs. These factors are beyond our control and may be unpredictable.
Our liability exposure for these employment laws and regulations may be higher than our restaurant peers because we are one of the largest restaurant companies that owns and operates all our restaurants, while most of our restaurant peers franchise some or a significant portion of their operations. 11 Table of Contents Increases in the cost of labor, including mandated minimum wage increases, could adversely impact our business and profitability.
Our liability exposure for these employment laws and regulations may be higher than our restaurant peers because we have more employees, since we are one of the largest restaurant companies that owns and operates all our restaurants, while most of our restaurant peers franchise some or a significant portion of their operations. 12 Table of Contents Increases in the cost of labor, including mandated minimum wage increases and increases in the cost of health benefits, could adversely impact our business and profitability.
The market price of our common stock may be more volatile than the market price of our peers. We believe the market price of our common stock generally has traded at a higher price-earnings ratio than stocks of most of our peer companies as well as the overall market, which typically has reflected market expectations for higher future operating results.
We believe the market price of our common stock generally has traded at a higher price-earnings ratio than stocks of most of our peer companies as well as the overall market, which typically has reflected market expectations for higher future operating results.
Our aggressive pace of opening new restaurants can make it increasingly difficult to recruit and hire sufficient numbers of qualified employees to manage and work in our restaurants, to maintain an effective system of internal controls for a dispersed workforce and to train employees to deliver a consistently high-quality product and customer experience, which could materially harm our business and results of operations.
The aggressive pace at which we open new restaurants can make it increasingly difficult to recruit and hire sufficient numbers of qualified employees to manage and work in our restaurants, to train employees to deliver a consistently high-quality product and guest experience and to maintain an effective system of internal controls for a dispersed workforce, which could materially harm our business and results of operations.
Risks Related to Our Growth and Business Strategy If we are unable to meet our projections for new restaurant openings, or efficiently maintain the attractiveness of our existing restaurants, our profitability could suffer. Our growth depends on our ability to open new restaurants at an aggressive rate and operate them profitably as soon as possible.
Risks Related to Our Growth and Business Strategy If we are unable to meet our new restaurant opening goals, or maintain the attractiveness of our existing restaurants, our profitability could suffer. Our growth depends on our ability to open new restaurants at an aggressive rate and operate them profitably as soon as possible.
These laws and regulations relate to matters such as employment discrimination, wage and hour laws, requirements to provide and document meal and rest periods or other benefits, family leave mandates, requirements regarding working conditions and accommodations to certain employees, citizenship or work authorization and related requirements, insurance and workers’ compensation rules, healthcare laws and anti-discrimination and anti-harassment laws.
These laws and regulations relate to matters such as employment discrimination, wage and hour laws, requirements to provide and document meal and rest periods or other benefits, family leave mandates, requirements regarding working conditions and accommodations to certain employees, requirements relating to setting and changing work schedules, citizenship or work authorization and related requirements, insurance and workers’ compensation rules, healthcare laws, anti-discrimination laws, including pay transparency requirements, and anti-harassment laws.
We may also communicate certain initiatives and goals regarding sustainability and human capital management related matters, such as diversity, responsible sourcing and social investments in our SEC filings or in other public disclosures.
We may also communicate certain initiatives, goals and strategies regarding environmental sustainability and human capital management related matters, such as workforce metrics, responsible sourcing and social investments in our SEC filings or in other public disclosures.
Ongoing global conflicts have disrupted and could continue to disrupt some shipping routes, which could result in shortages or delays of certain ingredients. In addition, we have a single or a limited number of suppliers for some of our ingredients, including certain oils, tomatoes, tortillas and adobo.
Ongoing global conflicts have disrupted and could continue to disrupt some shipping routes, which could result in shortages or delays of certain ingredients and packaging. In addition, we have a single or a limited number of suppliers for some of our ingredients, including lemon and lime juice, tomatoes and adobo.
Our ability to open and profitably operate new restaurants also is subject to various risks, such as the identification and availability of desirable locations; the negotiation of acceptable lease terms; the need to obtain all required governmental permits (including zoning approvals and liquor licenses) and comply with other regulatory requirements; the availability of capable contractors and subcontractors; increases in the cost and decreases in the availability of labor and building material; changes in weather, natural disasters, pandemics or other acts of God that could delay construction and adversely affect guest traffic; our ability to hire and train qualified management and restaurant employees; and general economic and business conditions.
In addition, the opening of new stores may negatively impact the profitability of existing stores that are located nearby. 17 Table of Contents Our ability to open and profitably operate new restaurants also is subject to various risks, such as the identification and availability of desirable locations; the negotiation of acceptable lease terms; the need to obtain all required governmental permits (including zoning approvals and liquor licenses) and comply with other regulatory requirements; the availability of capable contractors and subcontractors; increases in the cost and decreases in the availability of labor and building material; changes in weather, natural disasters, pandemics or other acts of God that could delay construction and adversely affect guest traffic; our ability to hire and train qualified management and restaurant employees; and general economic and business conditions.
To date, these attacks have not had a material impact on our operations, but we cannot provide assurance that they will not have an impact in the future. Our third-party providers’ and business partners’ information technology systems and databases are likewise subject to such risks.
To date, these attacks have not had a material impact on our operations, but we cannot provide assurance that they will not have an impact in the future. 13 Table of Contents Our third-party providers’ and business partners’ information technology systems and databases are subject to similar risks.
Any report, legitimate or rumored, of food-borne illness such as E. coli, hepatitis A, norovirus or salmonella, or other food safety issues, such as food tampering or contamination, at one of our restaurants could adversely affect our reputation and have a negative impact on our sales.
Any report, legitimate or rumored, of food-borne illness caused by pathogens such as E. coli, hepatitis A, norovirus, listeria, Campylobacter, Clostridium perfringens or salmonella, or other food safety issues, such as food tampering or contamination, at one of our restaurants could adversely affect our reputation and have a negative impact on our sales.
Depending on which ordering platform a guest uses – our platform or the platform of a third-party delivery service – the delivery fee we collect from the guest may be less than the actual delivery cost, which has a negative impact on our profitability.
Depending on which ordering platform a guest uses – our platform or the third-party delivery service platform – the delivery fee we collect from the guest may be less than the actual delivery cost.
We provide extensive training to our business partners and we include specific food quality and safety standards and guest service requirements in the contracts we sign with our business partners; however, we do not have direct control over the restaurants operated by third-party partners, and the quality and service in those restaurants may be less than the quality and service of Chipotle-operated restaurants.
We provide extensive training to our business partners and we require compliance with specific food quality and safety standards and guest service levels in our agreements with business partners; however, we do not have direct control over the restaurants operated by third-party partners, and the quality and service in those restaurants may be less than the quality and service of Chipotle-operated restaurants.
We incur substantial costs to comply with these laws and regulations and non-compliance could expose us to significant liabilities. For example, we have had lawsuits filed against us alleging violations of federal and state laws regarding employee wages and payment of overtime, meal and rest breaks, employee classification, employee record-keeping and related practices with respect to our employees.
We incur substantial costs to comply with these laws and regulations and non-compliance could expose us to significant liabilities. For example, we have had lawsuits filed against us alleging violations of federal and state laws regarding employee wages and payment of overtime, meal and rest breaks, pay transparency to applicants and related practices.
The markets for some of our ingredients, such as beef, avocado and other produce, are particularly volatile due to factors beyond our control such as limited sources, seasonal shifts, climate conditions, inclement weather, natural disasters, recent inflationary trends, military and geopolitical conflicts and industry demand, including as a result of animal disease outbreaks, international commodity markets, food safety concerns, product recalls and government regulation.
The prices for some of our ingredients, such as beef, avocados and other produce fluctuate due to factors beyond our control, such as limited sources, seasonal shifts, climate conditions, inclement weather, natural disasters, inflation, military and geopolitical conflicts and industry demand, including as a result of animal disease outbreaks, international commodity markets, food safety concerns, product recalls and government regulation.
As our reliance on technology has grown, the scope and severity of risks posed to our systems from cyber threats has increased.
As our reliance on technology has grown, the scope and severity of potential risks from cyber threats has increased.
Risks Related to the Nature of our Business and the Restaurant Industry Food safety and food-borne illness concerns may have an adverse effect on our business by decreasing sales and increasing costs. Food safety is our top priority, and we dedicate significant resources to ensuring that our guests enjoy safe, high-quality food products.
Risks Related to our Brand Reputation and Restaurant Operations Food safety and food-borne illness concerns may have an adverse effect on our business by negatively impacting our brand, decreasing sales and increasing costs. Food safety is our top priority, and we dedicate significant resources to ensuring that our guests enjoy safe, high-quality food products.
In addition, failure to adequately monitor and proactively respond to employee dissatisfaction could lead to poor guest satisfaction, higher turnover, litigation and unionization efforts, which could negatively impact our ability to meet our growth targets.
In addition, failure to adequately monitor and proactively respond to employee dissatisfaction could lead to poor guest satisfaction, higher turnover, litigation and unionization efforts, which could negatively impact our financial results.
Risks Related to Cybersecurity, Data Privacy and IT Systems Breaches or other unauthorized access, theft, modification or destruction of guest and/or employee personal, confidential or other material information that is stored in our systems or by third parties on our behalf could adversely affect our business.
Risks Related to Cybersecurity, Data Privacy and IT Systems Breaches or other unauthorized access, theft, modification or destruction of guest and/or employee personal, confidential or other material information that is stored in our systems or by third parties on our behalf could damage our reputation and expose us to potential liabilities.
If the costs associated with remodels, upgrades or regular upkeep are higher than anticipated, restaurants are closed for remodeling for longer periods than planned or remodeled restaurants do not perform as expected, we may not realize our projected desired return on investment, which could have a negative effect on our operating results. 16 Table of Contents Our failure to effectively manage and support our growth could have a negative adverse effect on our business and financial results.
If the costs associated with remodels, upgrades or regular upkeep are higher than anticipated, restaurants are closed for remodeling for longer periods than planned or remodeled restaurants do not perform as expected, which could have a negative effect on our operating results, and we may not realize our projected desired return on investment.
In the past year, the cost of opening new restaurants has increased, due to construction labor inflation and increased costs of materials and equipment.
The cost of opening new restaurants has continued to increase due to construction labor inflation and increased costs of materials and equipment.
If we fail to comply with applicable federal, state and local employment and labor laws and regulations, it could have a material, adverse impact on our business. Various federal, state and local employment and labor laws and regulations govern our relationships with our employees, and similar laws and regulations apply to our operations outside of the U.S.
If we fail to comply with applicable employment and labor laws and regulations, it could have a material, adverse impact on our business. Various employment and labor laws and regulations govern our relationships with our employees, both within and outside the U.S.
However, even with strong preventative controls and interventions, food safety risks cannot be completely eliminated in every restaurant.
However, even with strong preventative controls and interventions from farm to restaurant, food safety risks cannot be completely eliminated.
For example, we previously reported the settlement of a complaint alleging that we violated New York City’s Fair Workweek law and Earned Safe and Sick Time Act, and we also have been and are undergoing several audits of our compliance with employment law requirements, which could result in additional liabilities.
For example, in 2022 we settled a complaint alleging that we violated New York City’s Fair Workweek law and Earned Safe and Sick Time Act, and we have undergone several audits of our compliance with employment law requirements, which could result in additional liabilities.
A failure to maintain appropriate organizational capacity and capability to support our strategic initiatives or to build adequate bench strength with key skillsets required for seamless succession of leadership, could jeopardize our ability to meet our business performance expectations and growth targets.
A failure to maintain appropriate organizational capability to support our strategic initiatives, a failure to implement appropriate development programs and build adequate bench strength with key skillsets, or a failure to effectively manage our leadership succession, could jeopardize our ability to meet our business performance expectations and growth targets.
Even if the allegations against us in current or future legal matters are unfounded or we ultimately are held not liable, the costs to defend ourselves may be significant and the litigation may subject us to substantial settlements, fines, penalties or judgments against us and may divert management's attention away from operating our business, all of which could negatively impact our financial condition and results of operations.
Even if the allegations against us are unfounded or we ultimately are held not liable, the costs to defend ourselves may be significant and the proceedings may divert management's attention away from operating our business, all of which could negatively impact our financial condition and results of operations.
Our logging capabilities, or the logging capabilities of third parties, are not always complete or sufficiently granular, affecting our ability to fully understand the scope of security breaches. 12 Table of Contents Such security breaches also could result in a violation of applicable U.S. and international privacy, cyber and other laws or trigger data breach notification laws, including new disclosure rules promulgated by the SEC, and subject us to private third party or securities litigation and governmental investigations and proceedings, any of which could result in our exposure to material civil or criminal liability.
Such security breaches also could result in a violation of applicable U.S. and international privacy, cyber and other laws or trigger data breach notification laws, including new disclosure rules promulgated by the SEC, and subject us to private third party or securities litigation and governmental investigations and proceedings, any of which could result in our exposure to material civil or criminal liability.
Unauthorized access, theft, use, destruction or other compromises are becoming increasingly sophisticated and may occur through a variety of methods, including attacks using malicious code, vulnerabilities in software, hardware or other infrastructure (including systems used by our supply chain), system misconfigurations, phishing or social engineering. The rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity risks.
Unauthorized access, theft, use, destruction or other compromises are becoming increasingly sophisticated and may occur through a variety of methods, including attacks using malicious code, vulnerabilities in software, hardware or other infrastructure (including systems used by our supply chain), system misconfigurations, phishing, deepfakes, ransomware, malware or social engineering.
In addition, instances of food-borne illness or food safety issues that occur solely at competitors’ restaurants could result in negative publicity about the restaurant industry and adversely impact our sales.
In addition, instances of food-borne illness or food safety issues that occur solely at competitors’ restaurants, suppliers or distributors (even if we do not work with them) could result in negative publicity about the restaurant industry and adversely impact our sales.
We incur legal costs to defend these types cases, and we could incur losses from these and similar cases, and the amount of such losses or costs could be material. In addition, several jurisdictions (e.g.
We incur legal costs to defend these types of cases, and we could incur losses from these and similar cases, and the amount of such costs and losses could be material.
If the cost of one or more ingredients significantly increases, we may choose to temporarily suspend serving menu items that use those ingredients, such as guacamole or one of our proteins, rather than pay the increased cost.
If the cost of one or more ingredients significantly increases, we may choose to temporarily suspend serving menu items that use those ingredients, such as guacamole or one of our proteins, rather than pay the increased cost. Any such changes to our available menu may negatively impact our restaurant traffic and could adversely impact our sales and brand.
Several jurisdictions also have implemented sick pay and paid time off legislation, which requires employers to provide paid time off to employees, and “just cause” termination legislation, which restricts companies’ ability to terminate employees or reduce employees’ hours unless they can prove “just cause” or a “bona fide economic reason” for the termination or reduction in hours.
In addition, some jurisdictions in which we operate have implemented fair workweek or “secure scheduling” legislation, which impose complex requirements related to scheduling for certain restaurant employees; sick pay and paid time off legislation, which requires employers to provide paid time off to employees; and/or “just cause” termination legislation, which restricts companies’ ability to terminate employees or reduce employees’ hours unless they can prove “just cause” or a “bona fide economic reason” for the termination or reduction in hours.
Beginning in April 2024, new California legislation requires national restaurant chains, including Chipotle, to pay a minimum $20 per hour wage to restaurant workers in California, which minimum wage may be increased annually by a state-appointed council. Other state, county and city jurisdictions are considering similar regulations.
For example, in 2024 California required national restaurant chains, including Chipotle, to pay a minimum $20 per hour wage to California restaurant workers, which minimum wage may be increased annually by a state-appointed council. Other states, counties and cities are considering similar regulations.
We rely heavily on information technology systems and failures or interruptions in our IT systems could harm our ability to effectively operate our business and/or result in the loss of guests or employees.
The amount and scope of insurance we maintain may not cover all types of claims that may arise. We rely heavily on information technology systems and failures or interruptions in our IT systems could harm our ability to effectively operate our business and/or result in the loss of guests or employees.
All of these factors could have an adverse impact on our ability to attract and retain guests, which could in turn have a material adverse effect on our growth and profitability. Our digital business, which accounted for a significant portion of our 2023 total revenue, is subject to risks.
All of these factors could have an adverse impact on our ability to attract and retain guests, which could in turn have a material adverse effect on our growth and profitability.
Compliance with these laws and regulations, and future new laws or changes in these laws or regulations that impose additional requirements, can be costly. Any failure or perceived failure to comply with these laws or regulations could result in, among other things, revocation of required licenses, administrative enforcement actions, fines and civil and criminal liability.
Any failure or perceived failure to comply with applicable laws or regulations could result in, among other things, revocation of required licenses, administrative enforcement actions, fines and civil and criminal liability.
If the third-party delivery companies we utilize increase their fees or give greater priority or promotions on their platforms to other restaurants, our delivery business and our sales may be negatively impacted. These delivery companies maintain control over data regarding our guests who use their platform and over the guest experience.
If the third-party delivery companies we utilize increase the fees they charge users or give greater priority or promotions on their platforms to other restaurants, our delivery business and our sales may be negatively impacted.
The number and frequency of these attempts varies from year to year but could be exacerbated to some extent by an increase in our digital operations. In addition, we provide some guest and employee data, as well as confidential information important to our business, to third parties to conduct our business.
The number and frequency of these attempts varies from year to year and increases as the scope and scale of our technology footprint and digital operations increases. In addition, we provide guest and employee data, as well as confidential information important to our business to third parties.
We also compete with non-traditional market participants, such as “convenience meals” in the form of entrées, side dishes or meal preparation kits from the deli or prepared foods sections of grocery stores, meal kit delivery services, and “ghost” or “dark” kitchens, where meals are prepared at separate takeaway premises rather than a restaurant.
We also compete with non-traditional market participants, such as “convenience meals” in the form of entrées, side dishes or meal preparation kits from grocery stores, meal kit delivery services, and “ghost” or “dark” kitchens, where meals are prepared at separate takeaway premises rather than a restaurant, and with delivery aggregators and food delivery services, which provide consumers with convenient access to a broad range of competing restaurant chains and food retailers, particularly in urbanized areas, and may form a closer relationship with our guests.
We may be required to make significant capital investments and other expenditures to investigate security incidents, remedy cybersecurity problems, recuperate lost data, prevent future compromises and adapt systems and practices to react to the changing threat environment.
These risks also exist in companies that license our brand, that we partner with or invest in that use separate information systems. We may be required to make significant capital investments and other expenditures to investigate security incidents, remedy cybersecurity problems, recuperate lost data, prevent future compromises and adapt systems and practices to react to the changing threat environment.
In addition, we continue to improve our existing restaurants through remodels, upgrades and regular upkeep.
In addition, we need to maintain the attractiveness of our existing restaurants through remodels, upgrades and regular upkeep.
These factors also could cause us to, among other things, reduce the number and frequency of new restaurant openings, close restaurants or delay remodeling of our existing restaurant locations.
These factors also could cause us to, among other things, reduce the number and frequency of new restaurant openings, close restaurants or delay remodeling of our existing restaurant locations. Further, poor economic conditions may force nearby businesses to shut down, which could reduce traffic to our restaurants or cause our restaurant locations to be less attractive.
If we are not able to compete successfully, our business, financial condition and results of operations would be adversely affected. The restaurant industry is highly competitive with respect to taste preferences, price, food quality and selection, customer service, brand reputation, digital engagement, advertising and promotional initiatives, and the location, attractiveness and maintenance of restaurants.
The restaurant industry is highly competitive with respect to taste preferences, price, food quality and selection, customer service, brand reputation, digital engagement, advertising and promotional initiatives, and the location, attractiveness and maintenance of restaurants.
We may incur increased costs to comply with privacy and data protection laws and, if we fail to comply, we could be subject to government enforcement actions, private litigation and adverse publicity. Complex local, state, federal and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data.
If we fail to fully comply with privacy and data protection laws and regulations, we could incur significant civil and criminal penalties and liabilities, suffer reputational damage, and adverse publicity. Complex local, state, federal and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data.
Our business is dependent on frequent and consistent deliveries of ingredients that comply with our Food with Integrity specifications, such as dairy (for cheese, sour cream and queso).
Shortages or interruptions in the supply of ingredients could adversely affect our operating results. Our business is dependent on frequent and consistent deliveries of ingredients that comply with our Food with Integrity specifications, such as dairy (for cheese, sour cream and queso) and chicken that meets our Responsibly Raised requirements.
We rely heavily on information technology systems, including the point-of-sale and payment processing system in our restaurants, technologies supporting our digital and delivery business, technologies that trace ingredients back to suppliers and growers and manage our supply chain, our rewards program, technologies that facilitate marketing initiatives, employee engagement and payroll processing, and various other processes and transactions.
We are heavily dependent on information technology systems, including for administrative functions, point-of-sale and payment processing in our restaurants, digital ordering and delivery business, tracing ingredients back to suppliers and growers, digital Hazard Analysis and Critical Control Points monitoring, monitoring and managing our supply chain, our guest rewards program, marketing initiatives, employee engagement and payroll processing, and various other processes and transactions.
The ordering and payment platforms used by these third parties, our mobile app or our online ordering site have been and could again be interrupted by technological failures, user errors, cyber-attacks or other factors, which could adversely impact sales through these channels and negatively impact our overall sales and reputation.
The ordering and payment platforms used by these third parties, our mobile app or our online ordering site have been and could again be interrupted by technological failures, user errors, cyber-attacks or other factors, which could adversely impact sales through these channels and negatively impact our overall sales and reputation. 11 Table of Contents Risks Related to Human Capital If we are not able to hire, develop and retain qualified restaurant employees and/or appropriately plan our workforce, our growth plan and profitability could be adversely affected.
Litigation also may generate negative publicity, regardless of whether the allegations are valid, or we ultimately are not liable, which could damage our reputation, and adversely impact our sales as well as our relationships with our employees and guests. 15 Table of Contents We are subject to extensive laws, government regulation, and other legal requirements and our failure to comply with existing or new laws and regulations could adversely affect our operational efficiencies, ability to attract and retain talent and results of operations.
In addition, adverse publicity resulting from claims may damage our reputation. 16 Table of Contents We are subject to extensive laws, government regulation, and other legal requirements and our failure to comply with existing or new laws and regulations could adversely affect our operational efficiencies, ability to attract and retain talent and results of operations.
In November 2021, we announced that we had set science-based targets validated by the Science Based Targets Initiative to reduce absolute Scope 1, 2 and 3 greenhouse gas emissions 50% by 2030 from a 2019 base year, and achievement of this goal is subject to risks and uncertainties, many of which are outside of our control and may prove to be more difficult and costly than we anticipate. 17 Table of Contents In addition, statements about our sustainability-related initiatives and goals, and progress toward those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.
Achievement of this goal may prove to be more difficult and costly than we anticipate. In addition, statements about our sustainability-related initiatives and goals, and progress toward those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.
Risks Related to Supply Chain Increases in the costs of ingredients and other materials, including increases caused by inflation, global conflicts and climate risks, or the failure to procure sufficient ingredients could adversely affect our results of operations.
Risks Related to Our Supply Chain Increases in the costs of ingredients, restaurant equipment and other materials could adversely affect our financial results.
These legal proceedings may involve claims brought by employees, guests, government agencies, suppliers, shareholders or others through private actions, administrative proceedings, regulatory actions or other litigation, including litigation on a class or collective basis on behalf of what can be a large group of potential claimants.
These proceedings may be in the form of private actions, administrative proceedings, government enforcement or regulatory actions and litigation on a class or collective basis on behalf of what can be a large group of potential claimants.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Committee regularly reviews and discusses with our CISO and our CCTO the Company’s cybersecurity, privacy and data security programs, the status of projects to strengthen internal cybersecurity, results from third-party assessments, and any significant cybersecurity incidents, including recent incidents at other companies and the emerging threat landscape.
Biggest changeThe Committee regularly reviews with and discusses cybersecurity, privacy and data security programs, the status of projects to strengthen internal cybersecurity, results from third-party assessments, and any significant cybersecurity incidents, including recent incidents at other companies and the emerging threat landscape with our CISO and CCTO.
We also engage an independent third party to perform internal and external penetration testing of Chipotle's information security environment periodically and engage other third parties to periodically conduct assessments of our cybersecurity capabilities. In addition, we continue to expand training and awareness practices to mitigate risk from human error, including mandatory computer-based training and internal communications for employees.
We also engage an independent third party to periodically perform internal and external penetration testing of Chipotle's information security environment and engage other third parties to periodically conduct assessments of our cybersecurity capabilities. In addition, we continue to expand training and awareness practices to mitigate risk from human error, including mandatory computer-based training and internal communications for employees.
We provide prompt feedback (and, if necessary, additional training or remedial action) based on the results of such exercises. 19 Table of Contents Our processes also address cybersecurity risks associated with our use of third-party service providers including suppliers, software and cloud-based service providers, as well as third-party security firms used in different capacities to provide or operate some of our cybersecurity controls and technology systems.
We provide prompt feedback (and, if necessary, additional training or remedial action) based on the results of such exercises. 21 Table of Contents Our processes also address cybersecurity risks associated with our use of third-party service providers including suppliers, software and cloud-based service providers, as well as third-party security firms used in different capacities to provide or operate some of our cybersecurity controls and technology systems.
ITEM 1C. CY BERSECU RITY Cybersecurity Risk Management and Strategy As a global company, we are regularly subject to cyberattacks and other cybersecurity incidents. In response, we have implemented cybersecurity processes, technologies, and controls to aid in our efforts to assess, identify, and manage cybersecurity risks.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy As a global company, we are regularly subject to cyberattacks and other cybersecurity incidents. In response, we have implemented cybersecurity processes, technologies, and controls to aid in our efforts to assess, identify, and manage cybersecurity risks.
The Committee also reviews with management the implementation and effectiveness of the Company’s controls to monitor and mitigate cybersecurity risks. In addition, our Board receives an annual report and quarterly written updates regarding our cybersecurity program.
The Committee also reviews with management the implementation and effectiveness of the Company’s controls to monitor and mitigate cybersecurity risks. In addition, our Board receives an annual report and quarterly written updates regarding our cybersecurity program. 22 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPE RTIES As of December 31, 2023, there were 3,437 restaurants operated by Chipotle and our consolidated subsidiaries. Our main office is located at 610 Newport Center Drive, Suite 1100, Newport Beach, CA 92660 and our telephone number is (949) 524-4000. We lease our main office and substantially all of the properties on which we operate restaurants.
Biggest changeITEM 2. PROPERTIES As of December 31, 2024, Chipotle and our consolidated subsidiaries owned and operated 3,726 restaurants. Our main office is located at 610 Newport Center Drive, Suite 1100, Newport Beach, CA 92660 and our telephone number is (949) 524-4000. We lease our main office and substantially all of the properties on which we operate restaurants.
We own 17 properties and operate restaurants on all of them. For additional information regarding the lease terms and provisions, see Note 1. “Description of Business and Summary of Significant Accounting Policies” and Note 9. “Leases” in our consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data.” 20 Table of Contents
We own 17 properties and operate restaurants on all of them. For additional information regarding the lease terms and provisions, see Note 1. “Description of Business and Summary of Significant Accounting Policies” and Note 9. “Leases” in our consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data.”

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeTotal Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 52,611 $ 1,840.49 52,611 $ 271,538,394 Purchased 10/1 through 10/31 November 13,084 $ 2,092.54 13,084 $ 244,159,596 Purchased 11/1 through 11/30 December 8,828 $ 2,271.49 8,828 $ 424,106,921 Purchased 12/1 through 12/31 Total 74,523 $ 1,935.80 74,523 (1) Shares were repurchased pursuant to repurchase programs announced on July 26, 2023 and October 26, 2023.
Biggest changePeriod Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) Purchased 10/1 through 10/31 1,474,582 $ 58.05 1,474,582 $ 973,992,478 Purchased 11/1 through 11/30 2,348,512 $ 59.14 2,348,512 $ 835,097,636 Purchased 12/1 through 12/31 1,713,277 $ 62.31 1,713,277 $ 1,028,341,738 Total 5,536,371 $ 59.83 5,536,371 (1) Shares were repurchased pursuant to repurchase programs announced on July 24, 2024 and October 29, 2024.
We intend to continue to retain earnings for use in the operation and expansion of our business and to repurchase shares of common stock (subject to market conditions), and therefore do not anticipate paying any cash dividends on our common stock in the foreseeable future. ‎ 22 Table of Contents COMPARISON OF CUMULATIVE TOTAL RETURN The following graph compares the cumulative annual stockholders return on our common stock from December 31, 2018, through December 31, 2023, to that of the total return index for the S&P 500 and the S&P 500 Restaurants Index assuming an investment of $100 on December 31, 2018.
We intend to continue to retain earnings for use in the operation and expansion of our business and to repurchase shares of common stock (subject to market conditions), and therefore do not anticipate paying any cash dividends on our common stock in the foreseeable future. 24 Table of Contents COMPARISON OF CUMULATIVE TOTAL RETURN The following graph compares the cumulative annual stockholders return on our common stock from December 31, 2019, through December 31, 2024, to that of the total return index for the S&P 500 and the S&P 500 Restaurants Index assuming an investment of $100 on December 31, 2019.
Purchases of Equity Securities by the Issuer The table below reflects shares of common stock we repurchased during the fourth quarter of 2023.
Purchases of Equity Securities by the Issuer The table below reflects shares of common stock we repurchased during the fourth quarter of 2024.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the New York Stock Exchange under the symbol “CMG.” As of February 5, 2024, there were approximately 1,508 shareholders of record. This does not include persons whose stock is in nominee or “street name” accounts through brokers.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the New York Stock Exchange under the symbol “CMG.” As of January 31, 2025, there were approximately 2,394 shareholders of record. This does not include persons whose stock is in nominee or “street name” accounts through brokers.
(2) The December total includes an additional $200 million in authorized repurchases approved on December 14, 2023 and announced February 6, 2024. There is no expiration date for this program. The authorization to repurchase shares will end when we have repurchased the maximum amount of shares authorized, or we have determined to discontinue such repurchases.
(2) The December total includes an additional $300 million in authorized repurchases approved on December 17, 2024 and announced February 4, 2025. There is no expiration date for this program. The authorization to repurchase shares will end when we have repurchased the maximum amount of shares authorized, or we have determined to discontinue such repurchases.
Company/Index 2018 2019 2020 2021 2022 2023 Chipotle Mexican Grill, Inc. $ 100 $ 194 $ 321 $ 405 $ 321 $ 536 S&P 500 100 129 150 190 153 191 S&P 500 Restaurants 100 122 141 170 153 172 *$100 invested on December 31, 2018, in stock or index, including reinvestment of dividends. Fiscal year ending December 31, 2023.
Company/Index 2019 2020 2021 2022 2023 2024 Chipotle Mexican Grill, Inc. $ 100 $ 166 $ 209 $ 166 $ 273 $ 360 S&P 500 100 116 148 119 148 182 S&P 500 Restaurants 100 116 140 126 142 146 *$100 invested on December 31, 2019, in stock or index, including reinvestment of dividends. Fiscal year ending December 31, 2024.
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Source data: FactSet ‎ 23 Table of Contents ITEM 6 . RESERVED ITEM 7 . MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion together with our consolidated financial statements and related notes included in Item 8.
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Source data: Bloomberg ITEM 6. RESERVED 25 Table of Contents
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“Financial Statements and Supplementary Data.” This section of the Form 10-K generally discusses 2023 items and year-to-year comparisons of 2023 to 2022.
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Discussions of 2021 items and year-to-year comparisons of 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 on our Annual Report on Form 10-K for the year ended December 31, 2022.
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The discussion contains forward-looking statements involving risks, uncertainties and assumptions that could cause our results to differ materially from expectations. See “Cautionary Note Regarding Forward-Looking Statements.” Factors that might cause such differences include those described in Item 1A. “Risk Factors” and elsewhere in this report.
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Overview As of December 31, 2023, we operated 3,371 Chipotle restaurants throughout the United States, and 66 international Chipotle restaurants. We manage our U.S. operations based on eight regions and aggregate our operations to one reportable segment.
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Throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” we commonly discuss the following key operating metrics which we believe will drive our financial results and long-term growth model.
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W e believe these metrics are useful to investors because management uses these metrics to assess the growth of our business and the effectiveness of our marketing and operational strategies:  Comparable restaurant sales  Restaurant operating costs as a percentage of total revenue  New restaurant openings 2023 Financial Highlights, year-over-year:  Total revenue increased 14.3% to $9.9 billion  Comparable restaurant sales increased 7.9%  Diluted earnings per share was $44.34, a 38.4% increase from $32.04, which includes a $0.52 after-tax impact from expenses related to restaurant and corporate level impairment and closure costs, accelerated depreciation and corporate restructuring, partially offset by a reduction in contingencies related to certain legal proceedings.
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Sales Trends. Comparable restaurant sales increased 7.9% for the year ended December 31, 2023. The increase is primarily attributable to higher transactions and, to a lesser extent, an increase in average check. Comparable restaurant sales represent the change in period-over-period total revenue for restaurants in operation for at least 13 full calendar months .
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Digital sales represented 37.4% of total food and beverage revenue. Restaurant Operating Costs . During the year ended December 31, 2023, our restaurant operating costs (food, beverage and packaging; labor; occupancy; and other operating costs) were 73.8% of total revenue, a decrease from 76.1% during the year ended December 31, 2022.
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The decrease was driven primarily by sales leverage and, to a lesser extent, lower avocado prices. These decreases were partially offset by higher inflation across several food ingredients and, to a lesser extent, wage inflation. Restaurant Development. During the year ended December 31, 2023, we opened 271 new restaurants, which included 238 restaurants with a Chipotlane.
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We expect to open approximately 285-315 new restaurants in 2024 (including 5 to 10 relocations), which assumes developer, permit, inspection, and utility delays do not worsen. We expect that at least 80% of our new restaurants will include a Chipotlane. Cultivate Next Fund .
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Our Cultivate Next Fund is a venture formed to make early-stage investments into strategically aligned companies that further our mission to Cultivate a Better World. The Fund has an initial size of $50.0 million, which is financed almost entirely by Chipotle. As of December 31, 2023, we have made $33.0 million in investments through this Fund.
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In December 2023, our Board approved an additional $50.0 million financial commitment to this Fund. As of December 31, 2023, none of this additional $50.0 million has been invested. 24 Table of Contents Restaurant Activity The following table details restaurant unit data for the years indicated.
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Year ended December 31, 2023 2022 Beginning of period 3,187 2,966 Chipotle openings 270 235 Non-Chipotle openings 1 1 Chipotle permanent closures (3) (3) Chipotle relocations (12) (12) Non-Chipotle permanent closures (6) - Total restaurants at end of period 3,437 3,187 Results of Operations Our results of operations as a percentage of total revenue and period-over-period change are discussed in the following section.
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Revenue Year ended December 31, Percentage 2023 2022 change (dollars in millions) Food and beverage revenue $ 9,804.1 $ 8,558.0 14.6% Delivery service revenue 67.5 76.7 (11.9%) Total revenue $ 9,871.6 $ 8,634.7 14.3% Average restaurant sales (1) $ 3.0 $ 2.8 6.9% Comparable restaurant sales increase 7.9% 8.0% Transactions 5.0% 0.9% Average check 2.9% 7.1% Menu price increase 5.2% 12.0% Check mix (2.3%) (4.9%) (1) Average restaurant sales refer to the average trailing 12-month food and beverage sales for restaurants in operation for at least 12 full calendar months.
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The following is a summary of the change in restaurant sales for the period indicated: Year ended (dollars in millions) For the period ending December 31, 2022 $ 8,634.7 Change from: Comparable restaurant sales 636.3 Restaurant not yet in comparable base opened in 2023 242.1 Restaurant not yet in comparable base opened in 2022 356.3 Other 2.2 For the period ending December 31, 2023 $ 9,871.6 Food, Beverage and Packaging Costs Year ended December 31, Percentage 2023 2022 change (dollars in millions) Food, beverage and packaging $ 2,912.6 $ 2,602.2 11.9% As a percentage of total revenue 29.5% 30.1% (0.6%) 25 Table of Contents Food, beverage and packaging costs decreased 0.6% as a percentage of total revenue for the year ended December 31, 2023 compared to the year ended December 31, 2022, including 1.6% from menu price increases and 0.6% from lower avocado costs, partially offset by 1.6% due to inflation across several ingredient costs, primarily beef, tortillas and queso.
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Labor Costs Year ended December 31, Percentage 2023 2022 change (dollars in millions) Labor costs $ 2,441.0 $ 2,198.0 11.1% As a percentage of total revenue 24.7% 25.5% (0.8%) Labor costs decreased 0.8% as a percentage of total revenue for the year ended December 31, 2023 compared to the year ended December 31, 2022, including 1.4% from sales leverage, partially offset by 0.8% due to restaurant wage inflation.
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Beginning in April 2024, California legislation will require national restaurant chains, including Chipotle, to pay a minimum $20 per hour wage to restaurant workers in California This will increase wages in California nearly 20% and will result in wage inflation increasing from the low to mid-single digit range to the mid-single-digit range.
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We expect to increase menu prices in California to mitigate higher wage costs resulting from this legislation.
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Occupancy Costs Year ended December 31, Percentage 2023 2022 change (dollars in millions) Occupancy costs $ 503.3 $ 460.4 9.3% As a percentage of total revenue 5.1% 5.3% (0.2%) Occupancy costs decreased 0.2% as a percentage of total revenue for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to sales leverage, partially offset by increased rent expense associated with new restaurants.
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Other Operating Costs Year ended December 31, Percentage 2023 2022 change (dollars in millions) Other operating costs $ 1,428.7 $ 1,311.9 8.9% As a percentage of total revenue 14.5% 15.2% (0.7%) Other operating costs decreased 0.7% as a percentage of total revenue for the year ended December 31, 2023 compared to the year ended December 31, 2022, including 0.6% of sales leverage and 0.2% of lower delivery expenses, partially offset by 0.1% of higher maintenance costs.
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General and Administrative Expenses Year ended December 31, Percentage 2023 2022 change (dollars in millions) General and administrative expense $ 633.6 $ 564.2 12.3% As a percentage of total revenue 6.4% 6.5% (0.1%) 26 Table of Contents Following is a summary of the change in General and administrative expense for the periods indicated: Year ended (dollars in millions) For the period ending December 31, 2022 $ 564.2 Change from: Performance bonuses 31.1 Stock-based compensation, primarily performance-based awards 24.3 Outside services related to corporate initiatives 14.5 Wages, primarily due to headcount growth 10.9 Conferences, primarily biennial All Managers’ Conference (8.9) Other (2.5) For the period ending December 31, 2023 $ 633.6 Depreciation and Amortization Year ended December 31, Percentage 2023 2022 change (dollars in millions) Depreciation and amortization $ 319.4 $ 286.8 11.4% As a percentage of total revenue 3.2% 3.3% (0.1%) Depreciation and amortization decreased 0.1% as a percentage of total revenue for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to sales leverage, partially offset by increased depreciation expense associated with new restaurants and, to a lesser extent, the reduction of useful lives for certain leasehold improvements.
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Impairment, Closure Costs, and Asset Disposals Year ended December 31, Percentage 2023 2022 change (dollars in millions) Impairment, closure costs, and asset disposals $ 38.4 $ 21.1 81.5% As a percentage of total revenue 0.4% 0.2% 0.2% Impairment, closure costs, and asset disposals increased in dollar terms for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to elevated impairment of operating lease assets and leasehold improvements and higher charges related to the replacement of certain leasehold improvements and, to a lesser extent, the replacement of certain kitchen equipment.
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These elevated impairments include the impact of closing all Pizzeria Locale restaurants.
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Interest and Other Income, Net Year ended December 31, Percentage 2023 2022 change (dollars in millions) Interest and other income, net $ 62.7 $ 21.1 196.7% As a percentage of total revenue 0.6% 0.2% 0.4% Interest and other income, net increased in dollar terms for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to increased interest income on our investments in U.S.
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Treasury securities, money market funds and time deposits, partially offset by a gain on our investments in Tractor Beverages, Inc. of $10.4 million recognized in the second quarter of 2022. 27 Table of Contents Provision for Income Taxes Year ended December 31, Percentage 2023 2022 change (dollars in millions) Provision for income taxes $ (391.8) $ (282.4) 38.7% Effective income tax rate 24.2% 23.9% n/m* *Not meaningful The effective income tax rate increased 0.3% for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to a 0.4% decrease in excess tax benefits from equity vesting and exercises.
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Quarterly Financial Data/Seasonality Seasonal factors cause our profitability to fluctuate from quarter to quarter.
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Historically, our average daily restaurant sales and net income are lower in the first and fourth quarters due, in part, to the holiday season and because fewer people eat out during periods of inclement weather (the winter months) than during periods of mild or warm weather (the spring, summer and fall months).
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Other factors also have a seasonal effect on our results. For example, restaurants located near colleges and universities generally do more business during the academic year.
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Seasonal factors, however, might be moderated or outweighed by other factors that may influence our quarterly results, such as unexpected publicity impacting our business in a positive or negative way, worldwide health pandemics, impact of inflation on consumer spending, fluctuations in food or packaging costs, or the timing of menu price increases or promotional activities and other marketing initiatives.
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The number of trading days in a quarter can also affect our results, although, on an overall annual basis, changes in trading days do not have a significant impact.
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Our quarterly results are also affected by other factors such as the amount and timing of non -cash stock-based compensation expense and related tax rate impacts, litigation, settlement costs and related legal expenses, impairment charges and non-operating costs, timing of marketing or promotional expenses, the number and timing of new restaurants opened in a quarter, and closure of restaurants.
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New restaurants typically have higher operating costs following opening because of the expenses associated with their opening and operating inefficiencies in the months immediately following opening. Accordingly, results for a particular quarter are not necessarily indicative of results to be expected for any other quarter or for any year.
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Liquidity and Capital Resources Cash and Investments As of December 31, 2023, we had a cash and marketable investments balance of $1.8 billion, non-marketable investments of $75.4 million, and $25.6 million of restricted cash.
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After funding the current operations in our restaurants and support centers, the first planned use of our cash flow from operations is to provide capital for the continued investment in new restaurant construction.
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In addition to continuing to invest in our restaurant expansion, we expect to utilize cash flow from operations to: repurchase additional shares of our common stock subject to market conditions; invest in, maintain, and refurbish our existing restaurants; and for general corporate purposes.
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As of December 31, 2023, $424.1 million remained available for repurchases of shares of our common stock, which includes the $200.0 million additional authorization approved by our Board of Directors on December 14, 2023. Under the remaining repurchase authorizations, shares may be purchased from time to time in open market transactions, subject to market conditions.
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Borrowing Capacity As of December 31, 2023, we had $500.0 million of undrawn borrowing capacity under a line of credit facility. Use of Cash We believe that cash from operations, together with our cash and investment balances, will be sufficient to meet ongoing capital expenditures, working capital requirements and other cash needs for the foreseeable future.
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Assuming no significant declines in comparable restaurant sales, we expect we will generate positive cash flow for the foreseeable future.
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We have not required significant working capital because customers generally pay using cash or credit and debit cards and because our operations do not require significant receivables, nor do they require significant inventories due, in part, to our use of various fresh ingredients.
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In addition, we generally have the right to pay for the purchase of food, beverages and supplies sometime after the receipt of those items, generally within ten days, thereby reducing the need for incremental working capital to support our growth. 28 Table of Contents Our total capital expenditures for 2023 were $560.7 million.
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In 2023, we spent on average about $1.4 million in development and construction costs per new restaurant, or about $1.2 million net of landlord reimbursements of $0.2 million. In 2024, we expect to incur about $635.0 million in total capital expenditures.
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We expect approximately $430.0 million in capital expenditures related to our construction of new restaurants, before any reductions for landlord reimbursements. For new restaurants to be opened in 2024, we anticipate average development costs will remain consistent with 2023.
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We expect approximately $130.0 million in capital expenditures related to investments in existing restaurants including remodeling and similar improvements, new equipment and hardware, technology to optimize efficiencies . Finally, we expect a portion of our incurred capital expenditures to be for additional corporate initiatives including investments in technology to boost innovation, enhance the guest experience, and improve operations.
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The following table summarizes current and long-term material cash requirements as of December 31, 2023, which we expect to fund primarily with operating cash flows : Payments Due by Fiscal Year Total 2024 2025-2026 2027-2028 Thereafter (dollars in millions) Operating leases (1) $ 6,343 $ 447 $ 971 $ 938 $ 3,987 Purchase obligations (2) 2,090 969 768 352 1 Total $ 8,433 $ 1,416 $ 1,739 $ 1,290 $ 3,988 (1) See Note 9.
Removed
“Leases” of our consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data.” This includes commitments related to reasonably certain renewal periods. (2) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms. We have excluded agreements that are cancelable without penalty.
Removed
The majority of our purchase obligations relate to food, beverage and packaging, capital projects, information technology, marketing initiatives and corporate sponsorships, and other miscellaneous items. The above table does not include income tax liabilities for uncertain tax positions for which we are not able to make a reasonably reliable estimate of the amount and period of related future payments.
Removed
Additionally, we have excluded our estimated loss contingencies, due to uncertainty regarding the timing and amount of payment. See Note 11. “Commitments and Contingencies” of our consolidated financial statements included in Item 8.
Removed
“Financial Statements and Supplementary Data.” Cash Flows Cash provided by operating activities was $1.8 billion for the year ended December 31, 2023, compared to $1.3 billion for the year ended December 31, 2022. The increase was primarily due to higher net earnings and, to a lesser extent, net cash changes in non-tax operating assets and liabilities .
Removed
Cash used in investing activities was $946.0 million for the year ended December 31, 2023, compared to $830.0 million for the year ended December 31, 2022.
Removed
The change was primarily associated with increased capital expenditures of $81.6 million primarily related to costs associated with new restaurant development and, to a lesser extent, a $34.4 million increase in investment purchases net of investment maturities.
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Cash used in financing activities was $660.7 million for the year ended December 31, 2023, compared to $929.4 million for the year ended December 31, 2022. The change was primarily due to decreased treasury stock repurchases of $237.8 million and, to a lesser extent, $29.8 million of lower payments of tax withholdings related to stock-based compensation.
Removed
Critical Accounting Estimates We describe our significant accounting policies in Note 1. “Description of Business and Summary of Significant Accounting Policies” of our consolidated financial statements included in Item 8.
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“Financial Statements and Supplementary Data.” Critical accounting estimates are those that we believe are both significant and that require us to make difficult, subjective or complex judgments, often because we need to estimate the effect of inherently uncertain matters.
Removed
We base our estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates, and we might obtain different estimates if we used different assumptions or factors. Leases The majority of our operating leases consist of restaurant locations and office space.
Removed
We determine if a contract contains a lease at inception. Our leases generally have remaining terms of 1-20 years and most include options to extend the leases for additional 5-year periods.
Removed
Generally, the lease term is the minimum of the noncancelable period of the lease or the lease term inclusive of reasonably certain renewal periods up to a term of 20 years.
Removed
If the estimate of our reasonably certain lease term was changed, our depreciation and rent expense could differ materially. 29 Table of Contents Operating lease assets and liabilities are recognized at the lease commencement date, which is the date we control the use of the property. Operating lease liabilities represent the present value of lease payments not yet paid.
Removed
We made the policy election to combine lease and non-lease components. We consider fixed common area maintenance (“CAM”) part of our fixed future lease payments; therefore, fixed CAM is also included in our operating lease liability.
Removed
Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental borrowing rates corresponding to the reasonably certain lease term.
Removed
As we have no outstanding debt nor committed credit facilities, secured or otherwise, we estimate this rate based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. If the estimate of our incremental borrowing rate was changed, our operating lease assets and liabilities could differ materially.
Removed
Deferred Revenue Chipotle Rewards Eligible customers who enroll in the Chipotle Rewards loyalty program generally earn points for every dollar spent. After accumulating the required number of points, the customer may select a reward.
Removed
Earned rewards generally expire one to two months after they are issued, and points generally expire if an account is inactive for a period of six months.
Removed
The estimation of the standalone selling price of points and other rewards issued to customers involves several assumptions, primarily the estimated value of product for which the reward is expected to be redeemed and the probability that the points or reward will expire.
Removed
Our estimate of points and other rewards we expect to be redeemed is based on historical company specific data. These inputs are subject to change over time due to factors such as menu price increases, changes in point redemption options and changes in customer behavior.
Removed
A relative increase of 100 basis points in our estimated ultimate redemption rate for future redemptions would have resulted in a reduction of food and beverage revenue on our consolidated statement of income and comprehensive income of approximately $0.9 million for the year ended December 31, 2023.
Removed
Gift Cards We sell gift cards, which do not have expiration dates, and we do not deduct non-usage fees from outstanding gift card balances. Gift card balances are initially recorded as unearned revenue. We recognize revenue from gift cards when the gift card is redeemed by the customer. Historically, the majority of gift cards are redeemed within one year.
Removed
In addition, a portion of gift cards are not expected to be redeemed and will be recognized as breakage over time in proportion to gift card redemptions (“gift card breakage rate”) .
Removed
The gift card breakage rate is based on company and program specific information, including historical redemption patterns, and expected remittance to government agencies under unclaimed property laws, if applicable. We evaluate our gift card breakage rate estimate annually, or more frequently as circumstances warrant, and apply that rate to gift card redemptions.
Removed
A relative decrease of 100 basis points to our gift card breakage rate would have resulted in a reduction of food and beverage revenue on our consolidated statement of income and comprehensive income of approximately $0.6 million for the year ended December 31, 2023.
Removed
Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.
Removed
For restaurant assets, we test impairment at the individual restaurant asset group level, which includes leasehold improvements, property and equipment and operating lease assets. The fair value measurement for asset impairment is generally based on Level 3 inputs.
Removed
We first compare the carrying value of the asset (or asset group, referred interchangeably throughout as asset) to the asset’s estimated future undiscounted cash flows.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Removed
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24 Item 7A. Quantitative and Qualitative Disclosure About Market Risk 32 Item 8.
Added
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion together with our consolidated financial statements and related notes included in Item 8. “Financial Statements and Supplementary Data.” This section of the Form 10-K generally discusses 2024 items and year-to-year comparisons of 2024 to 2023.
Removed
Financial Statements and Supplementary Data 33 Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 33 Consolidated Balance Sheets as of December 3 1, 2023 and 2022 35 Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2023, 2022 and 2021 36 Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2023, 2022 and 2021 37 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 38 Notes to Consolidated Financial Statements 39 Note 1 – Description of Business and Summary of Significant Accounting Policies 39 Note 2 – Supplemental Balance Sheet Information 45 Note 3 – Revenue Recognition 46 Note 4 – Fair Value Measurements 47 Note 5 – Equity Investments 49 Note 6 – Income Taxes 49 Note 7 – Shareholders’ Equity 52 Note 8 – Stock-Based Compensation and Employee Benefit Plans 52 Note 9 – Leases 56 Note 10 – Earnings Per Share 57 Note 11 – Commitments and Contingencies 57 Note 12 – Debt 57 Note 13 – Related Party Transactions 58
Added
Discussions of 2022 items and year-to-year comparisons of 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 on our Annual Report on Form 10-K for the year ended December 31, 2023.
Added
The discussion contains forward-looking statements involving risks, uncertainties and assumptions that could cause our results to differ materially from expectations. See “Cautionary Note Regarding Forward-Looking Statements.” Factors that might cause such differences include those described in Item 1A. “Risk Factors”, 7A. "Quantitative and Qualitative Disclosure About Market Risk", and elsewhere in this report.
Added
Overview As of December 31, 2024, we owned 3,644 Chipotle restaurants throughout the United States, and 82 international Chipotle restaurants. Additionally, we had three international licensed restaurants. We manage our U.S. operations based on ten regions and aggregate our operations to one reportable segment.
Added
Throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” we commonly discuss the following key operating metrics which we believe will drive our financial results and long-term growth model.
Added
W e believe these metrics are useful to investors because management uses these metrics to assess the growth of our business and the effectiveness of our marketing and operational strategies: • Comparable restaurant sales • Food, beverage, and packaging as a percentage of total revenue • Labor as a percentage of total revenue • Occupancy as a percentage of total revenue • Other operating costs as a percentage of total revenue • New restaurant openings 2024 Financial Highlights, year-over-year: • Total revenue increased 14.6% to $11.3 billion • Comparable restaurant sales increased 7.4% • Diluted earnings per share was $1.11, a 24.7% increase from $0.89 Sales Trends.
Added
Comparable restaurant sales increased 7.4% for the year ended December 31, 2024. The increase is attributable to higher transactions of 5.3% and a 2.1% increase in average check. Comparable restaurant sales represent the change in period-over-period total revenue for restaurants in operation for at least 13 full calendar months. Digital sales represented 35.1% of total food and beverage revenue.
Added
For 2025, management is anticipating comparable restaurant sales growth in the low to mid-single digit range. Restaurant Development. During the year ended December 31, 2024, we opened 304 restaurants, which included 257 restaurants with a Chipotlane. We expect to open approximately 315 to 345 company-owned restaurants in 2025.
Added
We expect that at least 80% of our new company-owned restaurants will include a Chipotlane. Licensing . During the year ended December 31, 2024, three licensed restaurants were opened in the Middle East. Cultivate Next Fund .
Added
Our Cultivate Next Fund is a venture formed to make early-stage investments into strategically aligned companies that further our purpose to Cultivate a Better World. The Fund is authorized to invest up to $100.0 million, which is financed almost entirely by Chipotle.
Added
As of December 31, 2024, we have made $63.0 million in investments through this Fund. 26 Table of Contents Restaurant Activity The following table details company-owned restaurant unit data for the years indicated.
Added
Year ended December 31, 2024 2023 Beginning of period 3,437 3,187 Chipotle openings 304 270 Non-Chipotle openings - 1 Chipotle permanent closures (7) (3) Chipotle relocations (8) (12) Non-Chipotle permanent closures - (6) Total at end of period 3,726 3,437 The following table details licensed restaurant unit data for the years indicated.
Added
Year ended December 31, 2024 2023 Beginning of period - - Licensed restaurant openings 3 - Total at end of period 3 - Results of Operations Our results of operations as a percentage of total revenue and period-over-period change are discussed in the following section.
Added
Revenue Year ended December 31, Percentage 2024 2023 change (dollars in millions) Food and beverage revenue $ 11,247.4 $ 9,804.1 14.7% Delivery service revenue 66.5 67.5 (1.6 %) Total revenue $ 11,313.9 $ 9,871.6 14.6% Average restaurant sales (1) $ 3.213 $ 3.018 6.5% Comparable restaurant sales increase 7.4% 7.9% Transactions 5.3% 5.0% Average check 2.1% 2.9% Menu price increase 2.9% 5.2% Check mix (0.8 %) (2.3 %) (1) Average restaurant sales refers to the average trailing 12-month food and beverage revenue for restaurants in operation for at least 12 full calendar months. 27 Table of Contents The following is a summary of the change in restaurant sales for the period indicated: Year ended (dollars in millions) For the period ended December 31, 2023 $ 9,871.6 Change from: Comparable restaurant sales 695.4 Restaurants not yet in comparable base opened in 2024 290.4 Restaurants not yet in comparable base opened in 2023 453.7 Other 2.8 For the period ended December 31, 2024 $ 11,313.9 Food, Beverage and Packaging Costs Year ended December 31, Percentage 2024 2023 change (dollars in millions) Food, beverage and packaging $ 3,374.5 $ 2,912.6 15.9% As a percentage of total revenue 29.8% 29.5% 0.3 % Food, beverage and packaging costs increased 0.3% as a percentage of total revenue for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Added
The increase was due to higher usage of ingredients as we focused on ensuring consistent and generous portions, inflation across several ingredient costs, primarily avocados, and a protein mix shift from the Smoked Brisket limited time offering and a Braised Beef Barbacoa marketing initiative. This increase was partially offset by a 1.0% benefit from menu price increases.
Added
Labor Costs Year ended December 31, Percentage 2024 2023 change (dollars in millions) Labor costs $ 2,789.8 $ 2,441.0 14.3% As a percentage of total revenue 24.7% 24.7% - % Labor costs remained flat as a percentage of total revenue for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Added
The 1.1% benefit from sales leverage was mostly offset by 0.9% due to restaurant wage inflation, of which 0.4% was due to minimum wage increases for our restaurants in California.
Added
Occupancy Costs Year ended December 31, Percentage 2024 2023 change (dollars in millions) Occupancy costs $ 563.4 $ 503.3 11.9% As a percentage of total revenue 5.0% 5.1% (0.1 %) Occupancy costs decreased 0.1% as a percentage of total revenue for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to 0.3% of sales leverage partially offset by 0.2% of increased occupancy expense, of which 0.1% was associated with existing restaurants and 0.1% was associated with new restaurants. 28 Table of Contents Other Operating Costs Year ended December 31, Percentage 2024 2023 change (dollars in millions) Other operating costs $ 1,568.5 $ 1,428.7 9.8% As a percentage of total revenue 13.9% 14.5% (0.6 %) Other operating costs decreased 0.6% as a percentage of total revenue for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to 0.5% of sales leverage and 0.2% of lower delivery expenses.
Added
General and Administrative Expenses Year ended December 31, Percentage 2024 2023 change (dollars in millions) General and administrative expenses $ 697.5 $ 633.6 10.1% As a percentage of total revenue 6.2% 6.4% (0.2 %) The following is a summary of the change in general and administrative expenses for the period indicated: Year ended (dollars in millions) For the period ended December 31, 2023 $ 633.6 Change from: Wages 20.5 Conferences, primarily the biennial All Managers’ Conference 17.7 Legal contingencies 16.6 Outside services related to corporate initiatives 8.1 Stock-based compensation 5.3 Restructuring costs (6.5) Other 2.2 For the period ended December 31, 2024 $ 697.5 Impairment, Closure Costs, and Asset Disposals Year ended December 31, Percentage 2024 2023 change (dollars in millions) Impairment, closure costs, and asset disposals $ 26.9 $ 38.4 (29.8%) As a percentage of total revenue 0.2% 0.4% (0.2%) Impairment, closure costs, and asset disposals decreased in dollar terms for the year ended December 31, 2024 compared to the year ended December 31, 2023 , primarily due to a gain on the sale of corporate equipment and higher charges related to the replacement of certain leasehold improvements in the comparable period. 29 Table of Contents Interest and Other Income, Net Year ended December 31, Percentage 2024 2023 change (dollars in millions) Interest and other income, net $ 93.9 $ 62.7 49.8% As a percentage of total revenue 0.8% 0.6% 0.2% Interest and other income, net increased in dollar terms for the year ended December 31, 2024 compared to the year ended December 31, 2023 , primarily due to increased interest income from higher investment balances in U.S.
Added
Treasury securities, money market funds and time deposits.
Added
Provision for Income Taxes Year ended December 31, Percentage 2024 2023 change (dollars in millions) Provision for income taxes $ 476.1 $ 391.8 21.5% Effective income tax rate 23.7% 24.2% (0.5%) The effective income tax rate decreased 0.5% for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to lower nondeductible expenses of 0.6% and income tax reserves of 0.4%.
Added
These decreases were partially offset by a 0.6% reduction in tax benefits related to option exercise and equity vesting. Quarterly Financial Data/Seasonality Seasonal factors cause our profitability to fluctuate from quarter to quarter.
Added
Historically, our average daily restaurant sales and net income are lower in the first and fourth quarters due, in part, to the holiday season and because fewer people eat out during periods of inclement weather (the winter months) than during periods of mild or warm weather (the spring, summer and fall months).
Added
Other factors also have a seasonal effect on our results. For example, restaurants located near colleges and universities generally do more business during the academic year.
Added
Seasonal factors, however, might be moderated or outweighed by other factors that may influence our quarterly results, such as unexpected publicity impacting our business in a positive or negative way, disease outbreak, epidemic or endemic, the impact of inflation on consumer spending, fluctuations in food or packaging costs, or the timing of menu price increases or promotional activities and other marketing initiatives.
Added
The number of trading days in a quarter can also affect our results, although, on an overall annual basis, changes in trading days do not have a significant impact.
Added
Our quarterly results are also affected by other factors such as the amount and timing of non-cash stock-based compensation expense and related tax rate impacts, litigation, settlement costs and related legal expenses, impairment charges and non-operating costs, timing of marketing or promotional expenses, the number and timing of new restaurants opened in a quarter, and closure of restaurants.
Added
New restaurants typically have higher operating costs following opening because of the expenses associated with their opening and operating inefficiencies in the months immediately following opening.
Added
Accordingly, results for a particular quarter are not necessarily indicative of results to be expected for any other quarter or for any year. 30 Table of Contents Liquidity and Capital Resources Cash and Investments As of December 31, 2024, we had a cash and marketable investments balance of $2.2 billion, non-marketable investments of $85.2 million, and $29.8 million of restricted cash.
Added
After funding the current operations in our restaurants and support centers, the first planned use of our cash flow from operations is to provide capital for the continued investment in new restaurant construction.
Added
In addition to continuing to invest in our restaurant expansion, we expect to utilize cash flow from operations to: repurchase additional shares of our common stock subject to market conditions; invest in, maintain, and refurbish our existing restaurants; and for general corporate purposes.
Added
As of December 31, 2024, $1.0 billion remained available for repurchases of shares of our common stock, which includes the $300.0 million additional authorization approved by our Board of Directors on December 17, 2024. Under the remaining repurchase authorizations, shares may be purchased from time to time in open market transactions, subject to market conditions.
Added
Borrowing Capacity As of December 31, 2024, we had $500.0 million of undrawn borrowing capacity under a line of credit facility. Use of Cash We believe that cash from operations, together with our cash and investment balances, will be sufficient to meet ongoing capital expenditures, working capital requirements and other cash needs for the foreseeable future.
Added
Assuming no significant declines in comparable restaurant sales, we expect we will generate positive cash flow for the foreseeable future.
Added
We have not required significant working capital because guests generally pay using cash or credit and debit cards and because our operations do not require significant receivables, nor do they require significant inventories due, in part, to our use of various fresh ingredients.
Added
In addition, we generally have the right to pay for the purchase of food, beverages and supplies sometime after the receipt of those items, generally within ten days, thereby reducing the need for incremental working capital to support our growth. Our total capital expenditures for 2024 were $593.6 million.
Added
In 2024, we spent on average about $1.5 million in development and construction costs per new restaurant, or about $1.3 million net of landlord reimbursements of $0.2 million. In 2025, we expect to incur about $683.7 million in total capital expenditures.
Added
We expect approximately $502.7 million in capital expenditures related to our construction of new restaurants, before any reductions for landlord reimbursements. We expect the average investment cost for new restaurants opening in 2025 will be slightly higher than the average investment costs for those opened in 2024.
Added
We expect approximately $149.0 million in capital expenditures related to investments in existing restaurants including remodeling and similar improvements, new equipment and hardware, and technology to optimize efficiencies.
Added
Finally, we expect a portion of our incurred capital expenditures to be for additional corporate initiatives including investments in technology to boost innovation, enhance the guest experience, and improve operations. 31 Table of Contents The following table summarizes current and long-term material cash requirements as of December 31, 2024, which we expect to fund primarily with operating cash flows: Payments Due by Fiscal Year Total 2025 2026-2027 2028-2029 Thereafter (dollars in millions) Operating leases (1) $ 7,204 $ 502 $ 1,089 $ 1,036 $ 4,577 Purchase obligations (2) 2,289 1,161 766 362 - Total $ 9,493 $ 1,663 $ 1,855 $ 1,398 $ 4,577 (1) See Note 9.
Added
“Leases” of our consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data.” This includes commitments related to reasonably certain renewal periods for leases that have commenced and includes legally binding lease payments for leases signed but not yet commenced.
Added
(2) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms. We have excluded agreements that are cancellable without penalty. The majority of our purchase obligations relate to food, beverage and packaging, capital projects, information technology, marketing initiatives and corporate sponsorships, and other miscellaneous items.
Added
The above table does not include income tax liabilities for uncertain tax positions for which we are not able to make a reasonably reliable estimate of the amount and period of related future payments. Additionally, we have excluded our estimated loss contingencies, due to uncertainty regarding the timing and amount of payment. See Note 11.
Added
“Commitments and Contingencies” of our consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data.” Cash Flows Cash provided by operating activities was $2.1 billion for the year ended December 31, 2024, compared to $1.8 billion for the year ended December 31, 2023.
Added
The increase was primarily due to higher net earnings and, to a lesser extent, net cash changes in operating assets and liabilities. Cash used in investing activities was $837.5 million for the year ended December 31, 2024, compared to $946.0 million for the year ended December 31, 2023.
Added
The change was primarily associated with a $121.2 million decrease in investment purchases net of investment maturities. This was partially offset by increased capital expenditures of $32.9 million primarily related to costs associated with new restaurant development.
Added
Cash used in financing activities was $1.1 billion for the year ended December 31, 2024, compared to $660.7 million for the year ended December 31, 2023. The change was primarily due to increased repurchases of common stock of $409.2 million. Critical Accounting Estimates We describe our significant accounting policies in Note 1.
Added
“Description of Business and Summary of Significant Accounting Policies” of our consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data.” Critical accounting estimates are those that we believe are both significant and that require us to make difficult, subjective or complex judgments, often because we need to estimate the effect of inherently uncertain matters.
Added
We base our estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates, and we might obtain different estimates if we used different assumptions or factors. Leases The majority of our operating leases consist of restaurant locations and office space.
Added
We determine if a contract contains a lease at inception. Our leases generally have remaining terms of 1-20 years and most include options to extend the leases for additional 5-year periods.
Added
Generally, the lease term is the minimum of the noncancelable period of the lease or the lease term inclusive of reasonably certain renewal periods up to a term of 20 years.
Added
If the estimate of our reasonably certain lease term was changed, our depreciation and rent expense could differ materially. 32 Table of Contents Operating lease assets and liabilities are recognized at the lease commencement date, which is the date we control the use of the property. Operating lease liabilities represent the present value of lease payments not yet paid.
Added
We made the policy election to combine lease and non-lease components. We consider fixed common area maintenance (“CAM”) part of our fixed future lease payments; therefore, fixed CAM is also included in our operating lease liability.
Added
Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental borrowing rates corresponding to the reasonably certain lease term.
Added
As we have no outstanding debt nor committed credit facilities, secured or otherwise, we estimate this rate based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. If the estimate of our incremental borrowing rate was changed, our operating lease assets and liabilities could differ materially.
Added
Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long-lived assets are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.
Added
For restaurant assets, we test impairment at the individual restaurant asset group level, which includes leasehold improvements, property and equipment and operating lease assets. The fair value measurement for asset impairment is generally based on Level 3 inputs.
Added
We first compare the carrying value of the asset (or asset group, referred interchangeably throughout as asset) to the asset’s estimated future undiscounted cash flows.
Added
If the estimated undiscounted future cash flows are less than the carrying value of the asset, we determine if we have an impairment loss by comparing the carrying value of the asset to the asset's estimated fair value.
Added
The estimated fair value of the asset is generally determined using the income approach to measure the fair value, which is based on the present value of estimated future cash flows. Key inputs to the income approach for restaurant assets include the discount rate, projected revenue and expenses, and sublease income if we are closing the restaurant.
Added
In certain cases, management uses other market information, when available, to estimate the fair value of an asset. The impairment charges represent the excess of each asset’s carrying amount over its estimated fair value and are allocated among the long-lived asset or assets of the group.
Added
Our estimates of future revenues and expenses are highly subjective judgments based on internal projections and knowledge of our operations, historical performance, and trends in sales and restaurant operating costs, and can be significantly impacted by changes in our business or economic conditions.
Added
The determination of asset fair value is also subject to significant judgment and utilizes valuation techniques including discounting estimated future cash flows and market-based analyses to determine fair value. If our estimates or underlying assumptions, including discount rate and sublease income change in the future, our operating results may be materially impacted.
Added
Stock-based Compensation We recognize compensation expense for equity awards over the requisite service period based on the award’s fair value. Under our stock incentive plans, we issue stock-only stock appreciation rights ("SOSARs"), restricted stock units ("RSUs"), and performance stock units ("PSUs").
Added
We use the Black-Scholes valuation model to determine the fair value of our SOSARs, and we use the Monte Carlo simulation model to determine the fair value of PSUs that contain market conditions. Both of these models require assumptions to be made regarding our stock price volatility, the expected life of the award and expected dividend rates.
Added
The volatility and the expected life assumptions are based on our historical data. Similarly, the compensation expense of performance share awards is based in part on the estimated probability of achieving levels of performance associated with particular levels of payout for performance shares.
Added
We determine the probability of achievement of future levels of performance by comparing the relevant performance level with our internal estimates of future performance.
Added
Those estimates are based on a number of assumptions, including but not limited to growth in restaurant cash flow dollars, average restaurant level operating margin, and growth in new restaurant openings, and different assumptions may have resulted in different conclusions regarding the probability of achieving future levels of performance relevant to the payout levels for the awards.
Added
If we change our estimates of stock price volatility or expected lives of our SOSARs, or if we change our assumptions regarding the probability of achieving future levels of performance with respect to performance share awards, our stock-based compensation expense and results of operations may be materially impacted. 33 Table of Contents Income Taxes Our provision for income taxes, deferred tax assets and liabilities and any related valuation allowance requires the use of estimates based on our management’s interpretation and application of complex tax laws and accounting guidance.
Added
The majority of our income tax liability is incurred in the U.S. We establish reserves for uncertain tax positions for material, known tax exposures relating to deductions, transactions and other matters involving some uncertainty as to the measurement and recognition of the item.
Added
We may adjust these reserves when our judgment changes as a result of the evaluation of new information not previously available and will be reflected in the period in which the new information is available, or due to the expiration of any applicable statute of limitations.
Added
While we believe that our reserves are adequate, issues raised by a tax authority may be resolved at an amount different than the related reserve and could materially increase or decrease our income tax provision in future periods.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe have tried to increase, where practical, the number of suppliers for our ingredients, which we believe can help mitigate pricing volatility, and we follow industry news, trade issues, exchange rates, foreign demand, weather, crises and other world events that may affect our ingredient prices.
Biggest changeWe have tried to increase the number of suppliers for our ingredients, which we believe can help mitigate pricing volatility and supply continuity risks, and we follow industry news, trade tariffs, exchange rates, foreign demand, weather, geopolitical crises and other world events that may affect our ingredient prices.
Increases in ingredient prices could adversely affect our results if we choose for competitive or other reasons not to increase menu prices at the same rate at which ingredient costs increase, or if menu price increases result in customer resistance.
Increases in ingredient prices could adversely affect our results if we choose for competitive or other reasons not to increase menu prices at the same rate at which ingredient costs increase, or if menu price increases result in guest resistance.
However, a substantial majority of our operations and investment activities are transacted in the U.S., and therefore our foreign currency risk is not material at this date . 32 Table of Contents
However, a substantial majority of our operations and investment activities are transacted in the U.S., and therefore our foreign currency risk is not material at this date. 34 Table of Contents
As of December 31, 2023, we had $1.9 billion in cash and cash equivalents, current and long-term investments, and restricted cash, of which the substantial majority are interest bearing. Changes in interest rates affect the interest income we earn, and therefore impact our cash flows and results of operations.
As of December 31, 2024, we had $2.3 billion in cash and cash equivalents, current and long-term investments, and restricted cash, of which the substantial majority are interest bearing. Changes in interest rates affect the interest income we earn, and therefore impact our cash flows and results of operations.

Other CMG 10-K year-over-year comparisons